UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



	~~[X]~~☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2019~~2020



	~~[ ]~~☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

United States Steel Corporation

(Exact name of registrant as specified in its charter)



Delaware	1-16811	25-1897152
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)



600 Grant Street	Pittsburgh	PA	15219-2800
(Address of principal executive offices)			(Zip Code)

~~(412)~~ (412) 433-1121

(Registrant’s telephone number,

including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
United States Steel Corporation Common Stock	X	New York Stock Exchange
United States Steel Corporation Common Stock	X	Chicago Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesüx Noo

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ü] x No []o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act. ~~(Check one):~~



Large accelerated filerü	x	Accelerated filer	o	Non-accelerated filer	o	Smaller reporting company	☐	Emerging growth company __	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~___~~									o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes☐Noü

~~Securities registered pursuant to Section 12(b) of the Act:~~



~~Title of each class~~	~~Trading Symbol~~	~~Name of each exchange on which registered~~
~~United States Steel Corporation Common Stock~~	X	~~New York Stock Exchange and Chicago Stock Exchange~~

Common stock outstanding at April ~~25, 2019~~27, 2020 – ~~172,391,637~~170,375,833 shares

INDEX



			Page
PART I – FINANCIAL INFORMATION
	Item 1.	Financial Statements:
		Condensed Consolidated Statement of Operations (Unaudited)	1
		Condensed Consolidated Statement of Comprehensive Income (Loss) (Unaudited)	2
		Condensed Consolidated Balance Sheet (Unaudited)	3
		Condensed Consolidated Statement of Cash Flows (Unaudited)	4
		Notes to Condensed Consolidated Financial Statements (Unaudited)	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2731
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4049
	Item 4.	Controls and Procedures	41
		~~Supplemental Statistics (Unaudited)~~	4250
PART II – OTHER INFORMATION
	Item 1.	Legal Proceedings	43
	~~Item 4.~~	~~Mine Safety Disclosure~~	51
	Item 1A.	Risk Factors	58
	Item 4.	Mine Safety Disclosure	59
	Item 5.	Issuer Purchases of Equity Securities	5159
	Item 6.	Exhibits	5259
SIGNATURE			5360
WEB SITE POSTING			5360

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains information that may constitute ”forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We intend the forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in those sections. Generally, we have identified such forward-looking statements by using the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “target,” “forecast,” “aim,” "should," ~~“will”~~“will,” "may" and similar expressions or by using future dates in connection with any discussion of, among other things, operating performance, trends, events or developments that we expect or anticipate will occur in the future, statements relating to volume ~~growth,~~changes, share of sales and earnings per share ~~growth,~~changes, anticipated cost savings, potential capital and operational cash improvements, U. S. Steel's future ability or plans to take ownership of the Big River Steel joint venture as a wholly owned subsidiary, and statements expressing general views about future operating results. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Forward-looking statements are not historical facts, but instead represent only the Company’s beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company’s control. It is possible that the Company’s actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these forward-looking statements. Management believes that these forward-looking statements are reasonable as of the time made. However, caution should be taken not to place undue reliance on any such forward-looking statements because such statements speak only as of the date when made. Our Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our Company's historical experience and our present expectations or projections. These risks and uncertainties include, but are not limited to risks related to the satisfaction of the conditions of creating the joint venture with Stelco in the anticipated time frame or at all and the possibility that the option will not be exercised by Stelco, possible production or operations interruptions related to the novel coronavirus (COVID-19) pandemic that could disrupt supply or delivery of, or demand for, the Company's products, as well as the risks and uncertainties described in this report and in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2018,~~2019, and those described from time to time in our future reports filed with the Securities and Exchange Commission.

References in this Quarterly Report on Form 10-Q to "U. S. Steel," "the Company," "we," "us," and "our" refer to United States Steel Corporation and its consolidated subsidiaries unless otherwise indicated by the context.

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)



	Three Months Ended March 31,
(Dollars in millions, except per share amounts)	2020			2019
Net sales:
Net sales	$	2,397		$	3,124
Net sales to related parties (Note 20)	351			375
Total (Note 6)	2,748			3,499
Operating expenses (income):
Cost of sales (excludes items shown below)	2,605			3,172
Selling, general and administrative expenses	72			78
Depreciation, depletion and amortization	160			143
Loss (earnings) from investees	8			(9		)
Tubular asset impairment charges (Notes 1 and 10)	263			—
Gain on equity investee transactions	(31		)	—
Restructuring and other charges (Note 21)	41			—
Net loss on sale of assets	—			4
Other losses, net	5			—
Total	3,123			3,388
(Loss) earnings before interest and income taxes	(375		)	111
Interest expense	50			34
Interest income	(4		)	(5		)
Other financial benefits	(3		)	(3		)
Net periodic benefit (income) cost (other than service cost)	(8		)	23
Net interest and other financial costs	35			49
(Loss) earnings before income taxes	(410		)	62
Income tax (benefit) provision (Note 13)	(19		)	8
Net (loss) earnings	(391		)	54
Less: Net earnings attributable to noncontrolling interests	—			—
Net (loss) earnings attributable to United States Steel Corporation	$	(391	)	$	54
(Loss) earnings per common share (Note 14):
(Loss) earnings per share attributable to United States Steel Corporation stockholders:
-Basic	$	(2.30	)	$	0.31
-Diluted	$	(2.30	)	$	0.31

Three Months Ended
March 31,
(Dollars in millions, except per share amounts) 2019 2018
Net sales:
Net sales $ 3,124
$ 2,821
Net sales to related parties (Note 21) 375
328
Total (Note 5) 3,499
3,149
Operating expenses (income):
Cost of sales (excludes items shown below) 3,172
2,808
Selling, general and administrative expenses 78
78
Depreciation, depletion and amortization 143
128
Earnings from investees (9 ) (3 )
Net loss on disposal of assets 4
1
Total 3,388
3,012
Earnings before interest and income taxes 111
137
Interest expense 34
50
Interest income (5 ) (5 )
Loss on debt extinguishment (Note 11) —
46
Other financial (income) costs (3 ) 10
Net periodic benefit cost (other than service cost) 23
17
Net interest and other financial costs (Note 11) 49
118
Earnings before income taxes 62
19
Income tax provision (Note 13) 8
1
Net earnings 54
18
Less: Net earnings attributable to noncontrolling interests —
—
Net earnings attributable to United States Steel Corporation $ 54
$ 18
Earnings per common share (Note 14):
Earnings per share attributable to United States Steel Corporation stockholders:
-Basic $ 0.31
$ 0.10
-Diluted $ 0.31
$ 0.10

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
(Dollars in millions)	2019			2018			2020			2019
Net earnings	$	54		$	18
Net (loss) earnings							$	(391	)	$	54
Other comprehensive income (loss), net of tax:
Changes in foreign currency translation adjustments	(17		)	40			(23		)	(17		)
Changes in pension and other employee benefit accounts	32			46			52			32
Derivative financial instruments	15			(16		)
Changes in derivative financial instruments							(5		)	15
Total other comprehensive income, net of tax	30			70			24			30
Comprehensive income including noncontrolling interest	84			88
Comprehensive (loss) income including noncontrolling interest							(367		)	84
Comprehensive income attributable to noncontrolling interest	—			—			—			—
Comprehensive income attributable to United States Steel Corporation	$	84		$	88
Comprehensive (loss) income attributable to United States Steel Corporation							$	(367	)	$	84

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)


(Dollars in millions)	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents (Note 6)	$	676		$	1,000
Receivables, less allowance of $28 and $29	1,489			1,435
Receivables from related parties (Note 21)	240			224
Inventories (Note 7)	2,133			2,092
Cash and cash equivalents (Note 7)							$	1,350		$	749
Receivables, less allowance of $33 and $28							1,085			956
Receivables from related parties (Note 20)							87			221
Inventories (Note 8)							2,075			1,785
Other current assets	92			79			89			102
Total current assets	4,630			4,830			4,686			3,813
Operating lease assets (Note 8)	234			—
Long-term restricted cash (Note 7)							143			188
Operating lease assets (Note 9)							246			230
Property, plant and equipment	16,210			16,008			17,131			17,077
Less accumulated depreciation and depletion	11,221			11,143			11,724			11,630
Total property, plant and equipment, net	4,989			4,865			5,407			5,447
Investments and long-term receivables, less allowance of $5 in both periods	535			513
Intangibles – net (Note 9)	156			158
Investments and long-term receivables, less allowance of $8 and $5							1,421			1,466
Intangibles – net (Note 10)							134			150
Deferred income tax benefits (Note 13)	427			445			5			19
Other noncurrent assets	181			171			324			295
Total assets	$	11,152		$	10,982		$	12,366		$	11,608
Liabilities
Current liabilities:
Accounts payable and other accrued liabilities	$	2,428		$	2,454		$	2,033		$	1,970
Accounts payable to related parties (Note 21)	119			81
Accounts payable to related parties (Note 20)							100			84
Payroll and benefits payable	333			440			325			336
Accrued taxes	115			118			118			116
Accrued interest	26			39			42			45
Current operating lease liabilities (Note 8)	53			—
Current operating lease liabilities (Note 9)							60			60
Current portion of long-term debt (Note 16)	66			65			99			14
Total current liabilities	3,140			3,197			2,777			2,625
Noncurrent operating lease liabilities (Note 8)	185			—
Noncurrent operating lease liabilities (Note 9)							193			177
Long-term debt, less unamortized discount and debt issuance costs (Note 16)	2,326			2,316			4,616			3,627
Employee benefits	954			980			584			532
Deferred income tax liabilities (Note 13)	12			14			6			4
Deferred credits and other noncurrent liabilities	299			272			464			550
Total liabilities	6,916			6,779			8,640			7,515
Contingencies and commitments (Note 22)
Stockholders’ Equity (Note 19):
Common stock (178,042,935 and 177,386,430 shares issued) (Note 14)	178			177
Treasury stock, at cost (5,185,931 shares and 2,857,578 shares)	(126		)	(78		)
Stockholders’ Equity (Note 18):
Common stock (179,027,981 and 178,555,206 shares issued) (Note 14)							179			179
Treasury stock, at cost (8,653,246 and 8,509,337 shares)							(175		)	(173		)
Additional paid-in capital	3,924			3,917			4,024			4,020
Retained earnings	1,255			1,212			151			544
Accumulated other comprehensive loss (Note 20)	(996		)	(1,026		)
Accumulated other comprehensive loss (Note 19)							(454		)	(478		)
Total United States Steel Corporation stockholders’ equity	4,235			4,202			3,725			4,092
Noncontrolling interests	1			1			1			1
Total liabilities and stockholders’ equity	$	11,152		$	10,982		$	12,366		$	11,608

The accompanying notes are an integral part of these condensed consolidated financial statements.

UNITED STATES STEEL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)



	Three Months Ended March 31,
(Dollars in millions)	2020			2019
Increase (decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net (loss) earnings	$	(391	)	$	54
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, depletion and amortization	160			143
Tubular asset impairment charges (Notes 1 and 10)	263			—
Gain on equity investee transactions	(31		)	—
Restructuring and other charges (Note 21)	41			—
Pensions and other postretirement benefits	(1		)	30
Deferred income taxes (Note 13)	6			6
Net loss on sale of assets	—			4
Equity investee earnings, net of distributions received	8			(9		)
Changes in:
Current receivables	(97		)	(124		)
Inventories	(204		)	(50		)
Current accounts payable and accrued expenses	139			(73		)
Income taxes receivable/payable	3			41
All other, net	(38		)	7
Net cash (used in) provided by operating activities	(142		)	29
Investing activities:
Capital expenditures	(282		)	(302		)
Proceeds from sale of assets	1			—
Proceeds from sale of ownership interests in equity investees	8			—
Investments, net	(4		)	—
Net cash used in investing activities	(277		)	(302		)
Financing activities:
Revolving credit facilities - borrowings, net of financing costs (Note 16)	1,202			—
Revolving credit facilities - repayments (Note 16)	(281		)	—
Issuance of long-term debt, net of financing costs (Note 16)	67			—
Repayment of long-term debt (Note 16)	(2		)	—
Common stock repurchased (Note 24)	—			(42		)
Dividends paid	(2		)	(9		)
Taxes paid for equity compensation plans (Note 12)	(1		)	(5		)
Net cash provided by (used in) financing activities	983			(56		)
Effect of exchange rate changes on cash	(6		)	(2		)
Net increase (decrease) in cash, cash equivalents and restricted cash	558			(331		)
Cash, cash equivalents and restricted cash at beginning of year (Note 7)	939			1,040
Cash, cash equivalents and restricted cash at end of period (Note 7)	$	1,497		$	709

Three Months Ended
March 31,
(Dollars in millions) 2019 2018
Increase (decrease) in cash, cash equivalents and restricted cash
Operating activities:
Net earnings $ 54
$ 18
Adjustments to reconcile to net cash provided by operating activities:
Depreciation, depletion and amortization 143
128
Loss on debt extinguishment (Note 11) —
46
Pensions and other postretirement benefits 30
�� 22
Deferred income taxes (Note 13) 6
—
Net loss on disposal of assets 4
1
Distributions received, net of equity investees earnings (9 ) (3 )
Changes in:
Current receivables (124 ) (169 )
Inventories (50 ) (76 )
Current accounts payable and accrued expenses (73 ) (65 )
Income taxes receivable/payable 41
(8 )
Bank checks outstanding 9
4
All other, net (2 ) 3
Net cash provided by (used in) operating activities 29
(99 )
Investing activities:
Capital expenditures (302 ) (208 )
Net cash used in investing activities (302 ) (208 )
Financing activities:
Issuance of long-term debt, net of financing costs (Note 16) —
640
Repayment of long-term debt (Note 16) —
(538 )
Common stock repurchased (Note 24) (42 ) —
Dividends paid (9 ) (9 )
Receipt from exercise of stock options —
30
Taxes paid for equity compensation plans (Note 12) (5 ) (6 )
Net cash (used in) provided by financing activities (56 ) 117
Effect of exchange rate changes on cash (2 ) 10
Net decrease in cash, cash equivalents and restricted cash (331 ) (180 )
Cash, cash equivalents and restricted cash at beginning of year (Note 6) 1,040
1,597
Cash, cash equivalents and restricted cash at end of period (Note 6) $ 709
$ 1,417



Supplemental Cash Flow Information:
Non-cash investing and financing activities:
Change in accrued capital expenditures	$	(66	)	$	(32	)
U. S. Steel common stock issued for employee/non-employee director stock plans	17			15
Capital expenditures funded by finance lease borrowings	29			16
Export Credit Agreement (ECA) financing	34			—

The accompanying notes are an integral part of these condensed consolidated financial statements.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Basis of Presentation and Significant Accounting Policies

United States Steel Corporation (U. S. Steel, or the Company) produces and sells steel products, including flat-rolled and tubular products, in North America and Europe. Operations in North America also include iron ore and coke production facilities, railroad services and real estate operations. Operations in Europe also include coke production facilities.

The year-end Condensed Consolidated Balance Sheet data was derived from audited statements but does not include all disclosures required for complete financial statements by accounting principles generally accepted in the United States of America (U.S. GAAP). The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair statement of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. These condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities and Exchange Commission and do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. Additional information is contained in the United States Steel Corporation Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, which should be read in conjunction with these condensed financial statements.

Property, plant and equipment

U. S. Steel evaluates impairment of its property, plant and equipment whenever circumstances indicate that the carrying value may not be recoverable. We evaluate impairment of long-lived assets at the asset group level. Our asset groups are Flat-Rolled, welded tubular, seamless tubular and U. S. Steel Europe (USSE). Asset impairments are recognized when the carrying value of an asset group exceeds its recoverable amount as determined by the asset group's aggregate projected discounted cash flows.

During 2019, the challenging steel market environment in the U.S. and Europe and recent losses in the welded tubular asset group were considered triggering events for the Flat-Rolled, USSE and welded tubular asset groups. U. S. Steel completed a quantitative analysis of its long-lived assets for these asset groups and determined that the assets were not impaired. There were no triggering events for seamless tubular in 2019.

For the period ended March 31, 2020, the steep decline in oil prices that resulted from market oversupply and declining demand was considered a triggering event for the welded tubular and seamless tubular asset groups. A quantitative analysis was completed for both asset groups and a $263 million impairment, consisting of an impairment of $196 million for property, plant and equipment and $67 million for intangible assets (See Note 10) was recorded for the welded tubular asset group while 0 impairment was indicated for the seamless tubular asset group.

2. New Accounting Standards

In ~~August 2018,~~March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting, (ASU 2020-04). ASU 2020-04 provides optional exceptions for applying generally accepted accounting principles to modifications of contracts, hedging relationships, and other transactions that reference LIBOR or another rate that will be discontinued by reference rate reform if certain criteria are met. U. S. Steel is currently assessing the impact of the ASU but does not believe it will have a material impact on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU ~~2018-14,~~ ~~Compensation~~2019-12, Income Taxes (Topic 740) - ~~Retirement Benefits - Defined Benefit Plans- General (Subtopic 715-20), Disclosure Framework - Changes~~Simplifying the Accounting for Income Taxes (ASU 2019-12). ASU 2019-12 simplifies accounting for income taxes by removing certain exceptions from the general principles in Topic 740 including elimination of the exception to the ~~Disclosure Requirements~~incremental approach for ~~Defined Benefit Plans~~ (intraperiod tax allocation when there is a loss from continuing operations and income or a gain from other items such as other comprehensive income. ASU ~~2018-14).~~2019-12 also clarifies and amends certain guidance in Topic 740. ASU ~~2018-14 removes certain disclosures that the FASB no longer considers cost beneficial, adds certain disclosure requirements and clarifies others. ASU 2018-14~~2019-12 is effective for public companies for fiscal years beginning after December 15, 2020, including interim periods, with early adoption of all amendments in the same period permitted. U. S. Steel is currently assessing the impact of the ASU, but does not believe it will have a significant impact on its ~~defined benefit plan disclosures.~~Consolidated Financial Statements.

3. Recently Adopted Accounting Standard

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurementof Credit Losses on Financial Instruments~~(ASU~~ (ASU 2016-13), which adds an impairment model that is based on expected losses rather than incurred losses. Under ASU 2016-13, an entity recognizes as an allowance its estimate of expected credit losses, which the FASB believes will result in more timely recognition of such losses. ASU 2016-13 iswas effective for public companies for fiscal years beginning after December 15, 2019 including interim reporting periods, with early adoption permitted. U. S. Steel is currently assessing the impact of the ASU, but does not believe this ASU will have a material impact on its overall Consolidated Financial Statements.

3. ~~Recently Adopted Accounting Standards~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases~~ (ASU 2016-02). Under ASU 2016-02, for operating leases, a lessee should recognize in its statement of financial position a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term; recognize a single lease cost, which is allocated over the lease term, generally on a straight line basis, and classify all cash payments within operating activities in the statement of cash flows. For finance leases, a lessee is required to recognize a right-of-use asset and a lease liability; recognize interest on the lease liability separately from amortization of the right-of-use asset, and classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability within operating activities in the statement of cash flows. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and lease liabilities. In July 2018, the FASB issued ASU 2018-11, ~~Leases (Topic 842) -Targeted Improvements~~ ~~(ASU 2018-11), which provides an option to use a modified retrospective transition method at the adoption date.~~periods. U. S. Steel adopted ~~the new lease accounting~~this standard effective January 1, 2019 using the optional modified retrospective transition method outlined in ASU 2018-11. As a result of the adoption, an operating lease asset and current and noncurrent liabilities for operating leases were recorded, and there was an insignificant reduction in prior year retained earnings for the cumulative effect2020. The impact of adoption ~~for operating leases where payment started after lease commencement. See Note 8 for further details.~~was not material to the Condensed Consolidated Financial Statements.

U. S. Steel's ~~adoption of the following ASU's effective January 1, 2019 did not have a material impact on~~significant financial instruments which are valued at cost are trade receivables (receivables). U. S. Steel's receivables carry standard industry terms and are categorized in two receivable pools, U.S. and U. S. Steel Europe (USSE). Both pools use customer specific risk ratings based on customer financial ~~position, results~~metrics, past payment experience and other factors and qualitatively consider economic conditions to assess the level of ~~operations~~allowance for doubtful accounts. USSE mitigates credit risk for over 70 percent of its receivables balance using credit insurance, letters of credit, bank guarantees, prepayments or ~~cash flows:~~other collateral. Below is a summary of the allowance for doubtful accounts for the segments. Additional reserve recorded in the period ended March 31, 2020 primarily reflects uncertainty over near-term anticipated market conditions.



(in millions)	U.S.		USSE		Total Allowance
Balance at December 31, 2019	$	12	$	16	$	28
Additional reserve	5		—		5
Balance at March 31, 2020	$	17	$	16	$	33



~~Accounting Standard Update~~
~~2018-07~~	~~Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting~~
~~2018-15~~	~~Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs in a Cloud Computing Arrangement That is a Service Contract~~

4. Segment Information

U. S. Steel has ~~three~~3 reportable segments: ~~(1)~~North American Flat-Rolled ~~Products~~ (Flat-Rolled), which consists of the following three commercial entities that directly interact with our customers and service their needs: (i) automotive solutions, (ii) consumer solutions, and (iii) industrial, service center and mining solutions; (2) U. S. Steel Europe (USSE); and ~~(3)~~ Tubular Products (Tubular). ~~The~~U. S. Steel's investment in Big River Steel and the results of our railroad and real estate businesses that do not constitute reportable segments are combined and disclosed in the Other Businesses category.

The chief operating decision maker evaluates performance and determines resource allocations based on a number of factors, the primary measure being earnings (loss) before interest and income taxes. Earnings (loss) before interest and income taxes for reportable segments and Other Businesses does not include net interest and other financial costs (income), income taxes, and certain other items that management believes are not indicative of future results.

The accounting principles applied at the operating segment level in determining earnings (loss) before interest and income taxes are generally the same as those applied at the consolidated financial statement level. Intersegment sales and transfers are accounted for at market-based prices and are eliminated at the corporate consolidation level. Corporate-level selling, general and administrative expenses and costs related to certain former businesses are allocated to the reportable segments and Other Businesses based on measures of activity that management believes are reasonable.

The results of segment operations for the three months ended March 31, 2020 and 2019 ~~and~~ ~~2018~~are:



(In millions) Three Months Ended March 31, 2020	Customer Sales		Intersegment Sales			Net Sales			Earnings (loss) from investees			Earnings (loss) before interest and income taxes
Flat-Rolled	$	1,974	$	62		$	2,036		$	4		$	(35	)
USSE	505		1			506			—			(14		)
Tubular	255		3			258			1			(48		)
Total reportable segments	2,734		66			2,800			5			(97		)
Other Businesses	14		28			42			(13		)	1
Reconciling Items and Eliminations	—		(94		)	(94		)	—			(279		)
Total	$	2,748	$	—		$	2,748		$	(8	)	$	(375	)

Three Months Ended March 31, 2019
Flat-Rolled	$	2,405	$	69		$	2,474		$	7		$	95
USSE	737		3			740			—			29
Tubular	343		2			345			2			10
Total reportable segments	3,485		74			3,559			9			134
Other Businesses	14		30			44			—			8
Reconciling Items and Eliminations	—		(104		)	(104		)	—			(31		)
Total	$	3,499	$	—		$	3,499		$	9		$	111

(In millions) Three Months Ended March 31, 2019
Customer
Sales Intersegment
Sales Net
Sales Earnings
from
investees Earnings (loss) before interest and income taxes
Flat-Rolled $ 2,405
$ 69
$ 2,474
$ 7
$ 95
USSE 737
3
740
—
29
Tubular 343
2
345
2
10
Total reportable segments 3,485
74
3,559
9
134
Other Businesses 14
30
44
—
8
Reconciling Items and Eliminations —
(104 ) (104 ) —
(31 )
Total $ 3,499
$ —
$ 3,499
$ 9
$ 111

Three Months Ended March 31, 2018
Flat-Rolled $ 2,046
$ 57
$ 2,103
$ 2
$ 33
USSE 823
1
824
—
110
Tubular 266
—
266
1
(27 )
Total reportable segments 3,135
58
3,193
3
116
Other Businesses 14
31
45
—
11
Reconciling Items and Eliminations —
(89 ) (89 ) —
10
Total $ 3,149
$ —
$ 3,149
$ 3
$ 137

The following is a schedule of reconciling items to consolidated earnings before interest and income taxes:



	Three Months Ended March 31,
(In millions)	2020			2019
Items not allocated to segments:
Tubular asset impairment charges (Notes 1 and 10)	$	(263	)	$	—
Restructuring and other charges (Note 21)	(41		)	$	—
Gain on previously held investment in UPI	25			—
December 24, 2018 Clairton coke making facility fire	—			(31		)
Total reconciling items	$	(279	)	$	(31	)

Three Months Ended March 31,
(In millions) 2019 2018
Items not allocated to segments:

Clairton coke making facility fire $ (31 ) $ —
Granite City Works adjustment to temporary idling charges —
10
Total reconciling items $ (31 ) $ 10

5. ~~Revenue~~Acquisition

On February 29, 2020, U. S. Steel purchased the remaining 50% ownership interest in USS-POSCO Industries (UPI) for $3 million, net of cash received of $2 million. There was an assumption of accounts payable owed to U. S. Steel for prior sales of steel substrate of $135 million associated with the purchase that is reflected as a reduction in receivables from related parties on the Company's Condensed Consolidated Balance Sheet. UPI is located in Pittsburg, California and markets sheet and tin mill products, principally in the western United States. UPI produces hot rolled pickled and oiled, cold-rolled sheets, galvanized sheets and tin mill products made from hot bands principally provided by U. S. Steel. UPI’s annual production capability is approximately 1.5 million tons. The remaining interest in UPI was purchased by the Company to obtain more control over the future of this investment. The Company had a liability that resulted from historical losses recorded due to our continuing involvement in the previously held equity investment in UPI. Using step acquisition accounting we increased the value of our previously held equity investment to its fair value of $5 million which resulted in a gain of approximately $25 million. The gain was recorded in gain on equity investee transactions in the Condensed Consolidated Statement of Operations.

There was a step-up to fair value for property, plant and equipment of $47 million and an intangible asset of $54 million that was recorded. The intangible asset arises from a land lease contract, under which a certain portion of payment owed to UPI is realized in the form of deductions from electricity costs. The intangible asset will be amortized over a ten year period. Transaction costs associated with the acquisition and the amount of revenue recognized in the Condensed Consolidated Statement of Operations as a result of the acquisition were not significant.

The following table presents the allocation of the aggregate purchase price based on estimated fair values.



	(in millions)
Assets Acquired:
Receivables	$	44
Inventories	96
Other current assets	3
Property, plant and equipment	97
Intangibles	54
Other noncurrent assets	1
Total Assets Acquired	$	295

Liabilities Assumed:
UPI accounts payable for substrate purchased from U. S. Steel ^(a)	$	135
Accounts payable and accrued liabilities	19
Payroll and benefits payable	15
Current portion of long-term debt	55
Employee benefits	63
Total Liabilities Assumed	$	287

Fair value of previously held investment in UPI	$	5
Purchase price - net of cash acquired	3
Difference in assets acquired and liabilities assumed	$	8

^(a)The transaction to purchase UPI included the assumption of $135 million of accounts payable owed to U. S. Steel for prior sales of steel substrate to UPI. This amount is reflected as a reduction in receivables from related parties in the Company's Condensed Consolidated Balance Sheet as both the corresponding receivable and payable amounts between U. S. Steel and UPI are eliminated in consolidation upon acquisition.

U. S. Steel is continuing to conform accounting policies and procedures and evaluate assets and liabilities assumed. The results of this process may lead to further adjustments to the purchase price allocation presented above.

6. Revenue

Revenue is generated primarily from contracts to produce, ship and deliver steel products, and to a lesser extent, ~~to deliver~~ raw materials sales such as iron ore pellets ~~to deliver~~and coke by-productsand ~~for~~ railroad services and real estate sales. Generally, U. S. Steel’s performance obligations are satisfied ~~control of our products is transferred,~~ and revenue is recognized at a ~~single~~ point in time, when title transfers to our customer for product shipped or services are provided. Revenues are recorded net of any sales incentives. Shipping and other transportation costs charged to customers are treated as fulfillment activities and are recorded in both revenue and cost of sales at the time control is transferred to the customer. Costs related to obtaining sales contracts are incidental and are expensed when incurred. Because customers are invoiced at the time title transfers and U. S. Steel’s right to consideration is unconditional at that time, U. S. Steel does not maintain contract asset balances. Additionally, U. S. Steel does not maintain contract liability balances, as performance obligations are satisfied prior to customer payment for product. U. S. Steel offers industry standard payment terms.

U. S. Steel has ~~three~~3 reportable segments: Flat-Rolled, USSE and Tubular. Flat-Rolled primarily generates revenue from sheet and coated product sales to North American customers. Flat-Rolled also sells slabs, iron ore pellets and coke making by-products. USSE sells slabs, sheet, strip mill plate, coated products and spiral welded pipe to customers primarily in the Eastern European market. Tubular sells seamless and electric resistance welded (ERW) steel casing and tubing (commonly known as oil country tubular goods or OCTG), standard and line pipe and mechanical tubing and primarily serves customers in the oil, gas and petrochemical markets. Revenue from our railroad and real estate businesses is reported in the Other Businesses category in our segment reporting structure. The following tables disaggregate our revenue by product for each of our reportable business segments for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively:

Net Sales by Product (In millions):


(In millions) Three Months Ended March 31, 2019	Flat-Rolled		USSE		Tubular		Other Businesses		Total
Three Months Ended March 31, 2020											Flat-Rolled		USSE		Tubular		Other Businesses		Total
Semi-finished	$	88	$	4	$	—	$	—	$	92	$	27	$	1	$	—	$	—	$	28
Hot-rolled sheets	763		332		—		—		1,095		502		205		—		—		707
Cold-rolled sheets	661		88		—		—		749		598		45		—		—		643
Coated sheets	728		279		—		—		1,007		711		229		—		—		940
Tubular products	—		9		335		—		344		—		9		251		—		260
All Other^(a)	165		25		8		14		212		136		16		4		14		170
Total	$	2,405	$	737	$	343	$	14	$	3,499	$	1,974	$	505	$	255	$	14	$	2,748

^(a)Consists primarily of sales of raw materials and coke making by-products.


(In millions) Three Months Ended March 31, 2018	Flat-Rolled		USSE		Tubular		Other Businesses		Total
Three Months Ended March 31, 2019											Flat-Rolled		USSE		Tubular		Other Businesses		Total
Semi-finished	$	9	$	37	$	—	$	—	$	46	$	88	$	4	$	—	$	—	$	92
Hot-rolled sheets	572		353		—		—		925		763		332		—		—		1,095
Cold-rolled sheets	639		98		—		—		737		661		88		—		—		749
Coated sheets	706		297		—		—		1,003		728		279		—		—		1,007
Tubular products	—		12		259		—		271		—		9		335		—		344
All Other ^(a)	120		26		7		14		167		165		25		8		14		212
Total	$	2,046	$	823	$	266	$	14	$	3,149	$	2,405	$	737	$	343	$	14	$	3,499

^(a)Consists primarily of sales of raw materials and coke making by-products.

6. 7. Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within U. S. Steel's Condensed Consolidated Balance Sheets that sum to the total of the same amounts shown in the Condensed Consolidated Statement of Cash Flows:

(In millions) March 31, 2019 March 31, 2018
Cash and cash equivalents $ 676
$ 1,372
Restricted cash in other current assets 2
6
Restricted cash in other noncurrent assets 31
39
Total cash, cash equivalents and restricted cash $ 709
$ 1,417



(In millions)	March 31, 2020		March 31, 2019
Cash and cash equivalents	$	1,350	$	676
Restricted cash in other current assets	4		2
Long-term restricted cash	143		31
Total cash, cash equivalents and restricted cash	$	1,497	$	709

In order to preserve cash and enhance our liquidity during the COVID-19 outbreak and disruptions in the oil and gas industry, we borrowed an additional $800 million under the Fifth Amended and Restated Credit Agreement which was held as cash on our Condensed Consolidated Balance Sheet at March 31, 2020.

Amounts included in restricted cash represent cash balances which are legally or contractually restricted, primarily for electric arc furnace construction, environmental capital expenditure projects and insurance purposes.

7. 8. Inventories

Inventories are carried at the lower of cost or market for last-in, first-out (LIFO) inventories and lower of cost and net realizable value for first-in, first-out (FIFO) method inventories. The LIFO method is the predominant method of inventory costing in the United States. The FIFO method is the predominant inventory costing method in Europe. At March 31, ~~2019~~2020 and December 31, ~~2018~~2019, the LIFO method accounted for 7365 percent and 7475 percent of total inventory values, respectively.



(In millions)	March 31, 2020		December 31, 2019
Raw materials	$	633	$	628
Semi-finished products	954		720
Finished products	428		376
Supplies and sundry items	60		61
Total	$	2,075	$	1,785

(In millions) March 31, 2019 December 31, 2018
Raw materials $ 617
$ 605
Semi-finished products 1,059
1,021
Finished products 401
404
Supplies and sundry items 56
62
Total $ 2,133
$ 2,092

Current acquisition costs were estimated to exceed the above inventory values by $~~1,159~~762 million and ~~$1,038~~$735 million at March 31, ~~2019~~2020 and December 31, ~~2018~~,2019, respectively. As a result of the liquidation of LIFO inventories, cost of sales increased and earnings before ~~income~~interest and income taxes decreased by $15 million and $2$1 million infor the three months ended March 31, ~~2019~~2020 and March 31, ~~2018,~~2019, respectively.

Inventory includes $4140 million ~~and~~ ~~$39 million~~ of land held for residential/commercial development as of both March 31, ~~2019~~2020 and December 31, ~~2018, respectively.~~2019.

9. Leases

8. ~~Leases~~

Effective January 1, 2019, U. S. Steel adopted ASU 2016-02 using the ~~optional~~ modified retrospective transition method outlined in ASU 2018-11 which permitted application of ASU 2016-02 on January 1, 2019 using a cumulative effect adjustment to the opening balance of retained earnings. As a result of adoption, an operating lease asset of $234 million and current and noncurrent liabilities for operating leases of $53 million and $185 million, respectively, were recorded as of March 31, 2019 (see below tabular disclosure for further details). There was an insignificant cumulative effect of adoption for operating lease liabilities that exceeded their related asset values for leases where payment started after lease commencement.

Operating lease assets consist primarily of office space, aircraft, heavy mobile equipment used in our mining operations and facilities and equipment under operating service agreements for electricity generation and scrap processing. ~~We also have operating lease assets for light mobile equipment and information technology assets.~~ Significant finance leases include the Fairfield slab caster lease and heavy mobile equipment used in our mining operations (see Note 16 for further details). Variable lease payments are primarily related to operating service agreements where payment is solely dependent on consumption of certain services, such as raw material and by-product processing. ~~Most long-term leases include renewal options and, in certain leases, purchase options.~~ Generally, we are not reasonably certain that ~~these~~renewal options or purchase options will be exercised. ~~We have residual value guarantees under certain light mobile equipment leases.~~ There is no impact to our leased assets for residual value guarantees as the potential loss is not probable (see “Other Contingencies” in Note 22 for further details). We do not have material restrictive covenants associated with our leases or material amounts of sublease income. From time to time, U. S. Steel may enter into arrangements for the construction or purchase of an asset and then enter into a financing arrangement to lease the asset. U. S. Steel recognizes leased assets and liabilities under these arrangements when it obtains control of the asset.

U. S. Steel elected the option within ASU 2016-02 to straight-line expense and not record assets or liabilities for leases with an initial term of 12 months or less. For leases beginning in 2019 and later, we separate non-lease components from lease components for leases under operating service agreements. We do not separate non-lease components for other lease types as they are not significant. The Company does not have secured notes outstanding; therefore, we use an estimated secured borrowing rate as the discount rate for most of our leases. In accordance with the practical expedients outlined in ASU 2016-02, we did not use hindsight in determining the lease term for existing leases and elected not to reassess the following for existing leases: whether contracts contain a lease, lease classification, and initial direct costs.

The following table summarizes the lease amounts included in our Condensed Consolidated Balance Sheet as of March 31, 2020 and December 31, 2019.


(In millions)	Balance Sheet Location	March 31, 2019		Balance Sheet Location	March 31, 2020		December 31, 2019
Assets
Operating	Operating lease assets^(a)	$	234	Operating lease assets ^(a)	$	246	$	230
Finance	Property, plant and equipment^(b)	31		Property, plant and equipment ^(b)	82		56
Total Lease Assets		$	265		$	328	$	286

Liabilities
Current
Operating	Current operating lease liabilities	$	53	Current operating lease liabilities	$	60	$	60
Finance	Current portion of long-term debt	6		Current portion of long-term debt	15		11
Non-Current
Operating	Noncurrent operating lease liabilities	185		Noncurrent operating lease liabilities	193		177
Finance	Long-term debt less unamortized discount and debt issuance costs	32		Long-term debt less unamortized discount and issue costs	74		51
Total Lease Liabilities		$	276		$	342	$	299

^(a) Operating lease assets are recorded net of accumulated amortization of ~~$12 million.~~$57 million and $50 million as of March 31, 2020 and December 31, 2019, respectively.

^(b) Finance lease assets are recorded net of accumulated depreciation of ~~$21 million.~~$29 million and $27 million as of March 31, 2020 and December 31, 2019, respectively.

The following table summarizes lease costs included in our Condensed Consolidated Statement of Operations for the three month periods ended March 31, 2020 and March 31, 2019.



(In millions)	Classification	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating Lease Cost ^(a)	Cost of sales	$	18	$	21
Operating Lease Cost	Selling, general and administrative expenses	3		3
Finance Lease Cost
Amortization	Depreciation, depletion and amortization	3		1
Interest	Interest expense	1		—
Total Lease Cost		$	25	$	25

^(a)Operating lease cost recorded in cost of ~~$21~~sales includes $3 million and $3$5 million ~~was recorded in Cost~~ of ~~sales and Selling, general and administrative expenses, respectively,~~variable lease cost for the three months ended March 31, ~~2019. The~~2020 and March 31, 2019, respectively. An immaterial amount ~~recorded in Cost of sales includes $5 million~~ of variable lease cost is included in selling, general and anadministrative expenses and immaterial ~~amount~~amounts of short-term lease ~~cost. Finance lease~~cost are included in cost of ~~$1 million for the three months ended March 31, 2019 was primarily recorded in Depreciation, depletion~~sales and ~~amortization.~~selling, general and administrative expenses.

Lease liability maturities as of March 31, ~~2019~~2020 are shown ~~below:~~below.



(In millions)	Operating		Finance		Total
2020	$	59	$	16	$	75
2021	64		19		83
2022	51		23		74
2023	39		12		51
2024	31		9		40
After 2024	61		23		84
Total Lease Payments	$	305	$	102	$	407
Less: Interest	52		13		65
Present value of lease liabilities	$	253	$	89	$	342

(In millions) Operating Finance Total
2019 $ 53
$ 7
$ 60
2020 57
8
65
2021 47
8
55
2022 37
14
51
2023 28
3
31
After 2023 74
5
79
  Total Lease Payments $ 296
$ 45
$ 341
  Less: Interest 58
7
65
  Present value of lease liabilities $ 238
$ 38
$ 276

~~Future minimum commitments for capital and operating leases having initial non-cancelable lease terms in excess of one year as of the year ended December 31, 2018 were as follows:~~

(In millions)
Capital
Leases

Operating
Leases
2019 $ 5
$ 66
2020 5
55
2021 5
45
2022 11
37
2023 —
28
Later years —
72
Total minimum lease payments $ 26
$ 303
Less imputed interest costs 4

Present value of net minimum lease payments included in long-term debt $ 22

Lease terms and discount rates are shown ~~below:~~

below.



	As of March 31, ~~2019~~2020
Weighted average lease term
Finance	5 years
Operating	65 years

Weighted average discount rate
Finance	~~6.92~~5.07	%
Operating	~~7.16~~7.40	%

Supplemental cash flow information related to leases ~~was as follows:~~follows.



(In millions)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18	$	18
Operating cash flows from finance leases	1		—
Financing cash flows from finance leases	2		—
Right-of-use assets exchanged for lease liabilities:
Operating leases	32		8
Finance leases	29		16

(In millions) Three Months Ended
March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:

    Operating cash flows from operating leases $ 18
    Operating cash flows from finance leases —
    Financing cash flows from finance leases —
Right-of-use assets exchanged for lease liabilities:
    Operating leases 8
    Finance leases 16

10. Intangible Assets

Intangible assets that are being amortized on a straight-line basis over their estimated useful lives are detailed below:



		As of March 31, 2020								As of December 31, 2019
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Impairment		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	22 Years	$	132	$	55	$	77	$	—	$	132	$	76	$	56
Patents	10-15 Years	22		7		9		6		22		8		14
Energy Contract	10 Years	54		—		1		53		—		—		—
Other Intangibles	4-20 Years	14		5		9		—		14		9		5
Total amortizable intangible assets		$	222	$	67	$	96	$	59	$	168	$	93	$	75

As of March 31, 2019 As of December 31, 2018
(In millions) Useful
Lives Gross
Carrying
Amount Accumulated
Amortization Net
Amount Gross
Carrying
Amount Accumulated
Amortization Net
Amount
Customer relationships 22 Years $ 132
$ 72
$ 60
$ 132
$ 70
$ 62
Patents 10-15 Years
22
7
15
22
7
15
Other 4-20 Years 14
8
6
14
8
6
Total amortizable intangible assets
$ 168
$ 87
$ 81
$ 168
$ 85
$ 83

Identifiable intangible assets with finite lives are reviewed for impairment whenever events or circumstances indicate that the carrying values may not be recoverable. For the period ended March 31, 2020, the steep decline in oil prices that resulted from market oversupply and declining demand was considered a triggering event for the welded tubular asset group. A quantitative analysis was completed and resulted in a $67 million impairment of the welded tubular asset group's intangible assets. See Note 1 for further details.

Amortization expense was $2$3 million and $2 million for ~~both~~ the three months ended March 31, ~~2019~~2020 and March 31, ~~2018.~~2019, respectively. The estimated amortization expense for the remainder of ~~2019~~2020 is ~~$6 million~~.$5 million. We expect ~~a consistent level of~~approximately $6 million in annual amortization expense through ~~2023.~~2024.

As part of the purchase of UPI, we acquired an intangible asset with a fair value of approximately $54 million that will be amortized over ten years. This asset arises from a land lease contract, under which a certain portion of payment owed to UPI is realized in the form of deductions from electricity costs. See Note 5 to the Condensed Consolidated Financial Statements for further details.

The carrying amount of acquired water rights with indefinite lives as of March 31, ~~2019~~2020 and December 31, ~~2018~~2019 totaled $75 million. The acquired water rights are tested for impairment annually in the third quarter, or whenever events or circumstances indicate the carrying value may not be recoverable. U. S. Steel performed a ~~qualitative~~quantitative impairment evaluation of its acquired water rights during the third quarter of ~~2018.~~2019. Based on the results of the evaluation, the water rights were not impaired.

~~10.~~

11. Pensions and Other Benefits

The following table reflects the components of net periodic benefit cost for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019:



	Pension Benefits						Other Benefits
(In millions)	2020			2019			2020			2019
Service cost	$	12		$	11		$	3		$	3
Interest cost	48			60			16			23
Expected return on plan assets	(81		)	(81		)	(20		)	(20		)
Amortization of prior service cost	—			—			(2		)	7
Amortization of actuarial net loss (gain)	36			33			(4		)	1
Net periodic benefit cost, excluding below	15			23			(7		)	14
Multiemployer plans	21			18			—			—
Settlement, termination and curtailment losses ^(a)	6			—			—			—
Net periodic benefit cost (income)	$	42		$	41		$	(7	)	$	14

Pension
Benefits Other
Benefits
(In millions) 2019 2018 2019 2018
Service cost $ 11
$ 13
$ 3
$ 4
Interest cost 60
58
23
23
Expected return on plan assets (81 ) (90 ) (20 ) (20 )
Amortization of prior service cost —
—
7
7
Amortization of actuarial net loss 33
38
1
1
Net periodic benefit cost, excluding below 23
19
14
15
Multiemployer plans 18
14
—
—
Net periodic benefit cost $ 41
$ 33
$ 14
$ 15
^(a)During the three months ended March 31, 2020 the pension plan incurred special termination charges of approximately $6 million due to workforce restructuring.

Employer Contributions

During the first three months of ~~2019~~2020, U. S. Steel made cash payments of ~~$18~~$20 million to the Steelworkers’ Pension Trust, ~~and $2~~$1 million of pension payments not funded by ~~trusts.~~

~~During the first~~ ~~three~~ ~~months of~~ ~~2019, cash payments of $9~~trusts and $10 million ~~were made~~ for other postretirement benefit payments not funded by trusts.

Company contributions to defined contribution plans totaled $10 million ~~and $11 million~~ for both the three months ended March 31, ~~2019~~ 2020and ~~2018, respectively.~~2019.

~~11.~~ ~~Net Interest and Other Financial Costs~~

Net interest and other financial costs includes interest expense (net of capitalized interest), interest income, financing costs, net periodic benefit costs (other than service costs) related to pension and other post-employment (OPEB) plans, and foreign currency derivative and remeasurement gains and losses. During the three months ended March 31, 2019 and ~~2018~~, net foreign currency gains of $7 million and losses of $4 million, respectively, were recorded in other financial costs. Additionally, during the three months ended March 31, 2018, there was a loss on debt extinguishment of $46 million. There were no debt extinguishment transactions in 2019.

~~See Note 15 for additional information on U. S. Steel’s use of derivatives to mitigate its foreign currency exchange rate exposure.~~

12. Stock-Based Compensation Plans

U. S. Steel has outstanding stock-based compensation awards that were granted by the Compensation & Organization Committee of the Board of Directors (the Committee) under the 2005 Stock Incentive Plan (the 2005 Plan) and the 2016 Omnibus Incentive Compensation Plan (the Omnibus Plan). On April 26, 2016, the Company's stockholders approved the Omnibus Plan and authorized the Company to issue up to 7,200,000 shares of U. S. Steel common stock under the Omnibus Plan. The Company's stockholders authorized the issuance of an additional 6,300,000 shares under the Omnibus Plan on April 25, 2017. While the awards that were previously granted under the 2005 Plan remain outstanding, all future awards will be granted under the Omnibus Plan. As of March 31, ~~2019~~2020, there were ~~6,612,640~~926,361 shares available for future grants under the Omnibus Plan. On April 28, 2020, our stockholders approved an additional 4,700,000 shares to be available for grant under the Omnibus Plan.

Recent grants of stock-based compensation consist of restricted stock units, total ~~shareholder~~stockholder return (TSR) performance awards and return on capital employed (ROCE) performance awards. Shares of common stock under the Omnibus Plan are issued from authorized, but unissued stock. The following table is a ~~general~~ summary of the awards made under the Omnibus Plan during the first ~~quarter~~three months of ~~2019~~2020 and ~~2018.~~

2019.


	2019			2018			2020			2019
Grant Details	Shares^(a)	Fair Value^(b)		Shares^(a)	Fair Value^(b)		Shares^(a)	Fair Value^(b)		Shares^(a)	Fair Value^(b)
Restricted Stock Units	975,750	$	23.91	450,240	$	43.99	2,624,470	$	8.83	975,750	$	23.91
Performance Awards ^(c)
TSR	210,520	$	29.22	70,470	$	63.87	659,620	$	8.20	210,520	$	29.22
ROCE(d)	526,140	$	23.92	236,220	$	43.99	—	$	—	526,140	$	23.92

^(a) The share amounts shown in this table do not reflect an adjustment for estimated forfeitures.

^(b) Represents the per share ~~weighted-average~~weighted average for all grants during the ~~quarter.~~period.

^(c) The number of performance awards shown represents the target value of the award.

^(d) The ROCE awards granted in 2020 are not shown in the table above because they were granted in cash.

U. S. Steel recognized pretax stock-based compensation expense in the amount of $8$4 million and $7$8 million in the ~~three month~~three-month periods ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively.

As of March 31, ~~2019~~2020, total future compensation expense related to nonvested stock-based compensation arrangements was $4630 million, and the weighted average period over which this expense is expected to be recognized is approximately 1821 months.

Restricted stock units awarded as part of annual grants generally vest ratably over three years. Their fair value is the market price of the underlying common stock on the date of grant. Restricted stock units granted in connection with new-hire or retention grants generally cliff vest three years from the date of the grant.

TSR performance awards may vest at varying levels at the end of a ~~three-year~~three-year performance period if U. S. Steel's total ~~shareholder~~stockholder return compared to the total ~~shareholder~~stockholder return of a peer group of companies meets specified performance criteria ~~during~~with each year in the ~~three-year~~three-year performance ~~period.~~period weighted at 20 percent and the full three-year performance period weighted at 40 percent. TSR performance awards can vest at between ~~zero~~0 and 200 percent of the target award. The fair value of the TSR performance awards is calculated using a Monte-Carlo simulation.

ROCE performance awards may vest at the end of a three-year performance period contingent upon meeting the specified ROCE ~~metric.~~goal. ROCE performance awards can vest at between ~~zero~~0 and 200 percent of the target award. The fair value of the ROCE performance awards is the average market price of the underlying common stock on the date of grant. The 2020 ROCE performance awards were granted in cash.

For further details about our stock-based compensation incentive plans and stock awards see Note 15 of the United States Steel Corporation Annual Report on Form 10-K for the fiscal ~~year ended~~year-ended December 31, ~~2018.~~2019.

13. Income Taxes

Tax provision

For the three months endedMarch 31, ~~2019~~2020 and ~~2018~~2019, we recorded a tax ~~provision~~benefit of $819 million on our pretax ~~earnings~~loss of $62410 million and a tax provision of $1$8 million on our pretax earnings of ~~$19~~$62 million, respectively. ~~The~~In general, the amount of tax ~~provision~~expense or benefit from continuing operations is determined without regard to the tax effect of other categories of income or loss, such as other comprehensive income. However, an exception to this rule applies when there is a loss from continuing operations and income from other categories. In 2020, the tax benefit includes a discrete benefit of $10 million related to this accounting exception. Due to the full valuation allowance on our domestic deferred tax assets, the tax benefit in ~~both periods~~2020 does not reflect any additional tax benefit for domestic pretax losses. In 2019, the tax provision reflects a benefit for percentage depletion in excess of cost depletion from iron ore that we produce and consume or sell. ~~In 2018, the tax provision also reflects a tax benefit for the release of a portion of the valuation allowance due to pretax income.~~

The tax provision for the first three months of ~~2019~~2020 is based on an estimated annual effective rate, which requires management to make its best estimate of annual pretax ~~income~~earnings or loss.

During the year, management regularly updates forecasted annual pretax results for the various countries in which we operate based on changes in factors such as prices, shipments, product mix, plant operating performance and cost estimates. To the extent that actual ~~2019~~2020 pretax results for U.S. and foreign income or loss vary from estimates applied herein, the actual tax provision or benefit recognized in ~~2019~~2020 could be materially different from the forecasted amount used to estimate the tax provision for the three months endedMarch 31, ~~2019~~.2020.

Deferred taxes

Each quarter U. S. Steel analyzes the likelihood that our deferred tax assets will be realized. A valuation allowance is recorded if, based on the weight of all available positive and negative evidence, it is more likely than not that some portion, or all, of the deferred tax asset may not be realized.

At March 31, ~~2019,~~2020, U. S. Steel reviewed all available positive and negative evidence and determined that it is more likely than not that ~~certain~~all of its net domestic deferred tax assets may not be realized.

U. S. Steel will continue to monitor the realizability of its deferred tax assets on a quarterly basis taking into consideration, among other items, the uncertainty regarding the Company's continued ability to generate domestic income in the near term. In the future, if we determine that realization is more likely than not for deferred tax assets with a valuation allowance, the related valuation allowance will be reduced, and we will record a non-cash benefit to earnings.

Unrecognized tax benefits

Unrecognized tax benefits are the differences between a tax position taken, or expected to be taken, in a tax return and the benefit recognized for accounting purposes pursuant to the guidance in ~~ASC~~Accounting Standards Codification (ASC) Topic 740 on income taxes. ~~As of March 31, 2019 and December 31, 2018, the~~The total amount of gross unrecognized tax benefits was ~~$34~~$3 million as of both March 31, 2020 and ~~$35 million, respectively.~~December 31, 2019. The total amount of net unrecognized tax benefits that, if recognized, would affect the effective tax rate was $2$2 million as of both March 31, ~~2019~~2020 and December 31, ~~2018~~.2019.

U. S. Steel records interest related to uncertain tax positions as a part of net interest and other financial costs in the Condensed Consolidated Statement of Operations. Any penalties are recognized as part of selling, general and administrative expenses. As of both March 31, ~~2019~~2020 and December 31, ~~2018~~2019, U. S. Steel had accrued liabilities of $2 millionfor interest and penalties related to uncertain tax ~~positions.~~positions, respectively.

It is reasonably expected that during the next 12 months unrecognized tax benefits related to income tax positions will ~~decrease~~change by ~~approximately $32 million.~~an immaterial amount.

14. Earnings and Dividends Per Common Share

(Loss) Earnings Per Share Attributable to United States Steel Corporation Stockholders

Basic (loss) earnings per common share is based on the weighted average number of common shares outstanding during the period.

Diluted (loss) earnings per common share assumes the exercise of stock options and the vesting of restricted stock units and performance awards, provided in each case the effect is dilutive.

The "treasury stock" method is used to calculate the dilutive effect of the Senior Convertible Notes due in 2026 (due to our current intent and policy, among other factors, to settle the principal amount of the 2026 Senior Convertible Notes in cash upon conversion).

The computations for basic and diluted (loss) earnings per common share from continuing operations are as follows:



	Three Months Ended March 31,
(Dollars in millions, except per share amounts)	2020			2019
(Loss) earnings attributable to United States Steel Corporation stockholders	$	(391	)	$	54
Weighted-average shares outstanding (in thousands):
Basic	170,224			173,241
Effect of convertible notes	—			—
Effect of stock options, restricted stock units and performance awards	—			1,304
Adjusted weighted-average shares outstanding, diluted	170,224			174,545
Basic (loss) earnings per common share	$	(2.30	)	$	0.31
Diluted (loss) earnings per common share	$	(2.30	)	$	0.31

Three Months Ended March 31,
(Dollars in millions, except per share amounts) 2019 2018
Earnings attributable to United States Steel Corporation stockholders $ 54
$ 18
Weighted-average shares outstanding (in thousands):

Basic 173,241
176,157
Effect of stock options, restricted stock units and performance awards 1,304
2,132
Adjusted weighted-average shares outstanding, diluted 174,545
178,289
Basic earnings per common share $ 0.31
$ 0.10
Diluted earnings per common share $ 0.31
$ 0.10

The following table summarizes the securities that were antidilutive, and therefore, were not included in the computations of diluted earnings per common share:



	Three Months Ended March 31,
(In thousands)	2020	2019
Securities granted under the 2016 Omnibus Incentive Compensation Plan, as amended	4,942	3,179
Securities convertible under the Senior Convertible Notes	—	—
Total	4,942	3,179

Three Months Ended March 31,
(In thousands) 2019 2018
Securities granted under the 2016 Omnibus Incentive Compensation Plan, as amended 3,179
1,982

Dividends Paid Per Share

The dividend for the first quarter of ~~2019~~2020 and ~~2018~~2019 was one cent and five cents per common ~~share.~~share, respectively.

15. Derivative Instruments

U. S. Steel is exposed to foreign currency exchange rate risks in our European operations. USSE’s revenues are primarily in euros and costs are primarily in euros and U.S. dollars. U. S. Steel uses foreign exchange forward sales contracts (foreign exchange forwards) with maturities no longer than 12 months to exchange euros for U.S. dollars to manage our currency requirements and exposure to foreign currency exchange rate fluctuations. Derivative instruments are required to be recognized at fair value in the Condensed Consolidated Balance Sheet. U. S. Steel ~~has~~did not ~~elected~~designate euro foreign exchange forwards entered into prior to ~~designate these contracts~~July 1, 2019, as ~~hedges. Therefore,~~hedges; therefore, changes in their fair value ~~are~~were recognized immediately in the Condensed Consolidated ~~Statement~~Statements of Operations (mark-to-market accounting). For those contracts, U. S. Steel will continue to recognize changes in fair value immediately through earnings until the contracts mature. U. S. Steel elected cash flow hedge accounting for euro foreign exchange forwards prospectively effective July 1, 2019. Accordingly, future gains and ~~are also shown in~~losses for euro foreign exchange forwards entered into after July 1, 2019 will be recorded within accumulated other comprehensive income (AOCI) until the ~~tabular disclosure below.~~related contract impacts earnings. We mitigate the risk of concentration of counterparty credit risk by purchasing our forwards from several counterparties.

In 2018, U. S. Steel entered into long-term freight contracts in its domestic operations that require payment in Canadian dollars (CAD). We entered into foreign exchange forward contracts with remaining maturities up to 209 months to exchange USD for CAD to mitigate a portion of the related risk of exchange rate fluctuations and to manage our currency requirements. We elected to designate these contracts as cash flow hedges. ~~Accordingly, we record gains and losses on these contracts within Accumulated Other Comprehensive Income (AOCI) until the related contract impacts earnings.~~

~~From time to time~~ U. S. Steel may use fixed-price forward physical purchase contracts to partially manage our exposure to price risk related to the purchases of natural gas, zinc, and tin used in the production process. Generally, forward physical purchase contracts qualify for the normal purchase and normal sales exceptions described in ASC Topic 815 and are not subject to mark-to-market accounting. U. S. Steel also uses financial swaps to protect from the commodity price risk associated with purchases of natural gas, zinc and tin (commodity purchase swaps). In January 2020, the Company began purchasing commodity purchase swaps to mitigate variable purchase price risk for electricity at our Gary Works location. We elected cash flow hedge accounting for ~~domestic~~our U.S. commodity purchase swaps for natural gas, zinc and ~~utilize~~tin and use mark-to-market accounting for commodity purchase swaps used in our European ~~operations.~~

Financial swaps are also used to partially manage the sales price of certain hot-rolled coil and iron ore pellet contract sales (sales swaps). We elected cash flow hedge accounting for hot-rolled coil sales swaps effective January 1, 2018operations and for ~~iron ore pellet sales swaps effective January 1, 2019.~~

electricity commodity purchase swaps.

In accordance with the guidance in ASC Topic 820 on fair value measurements and disclosures, the fair value of our foreign exchange forwards, commodity purchase swaps and sales swaps was determined using Level 2 inputs, which are defined as "significant other observable" inputs. The inputs used are from market sources that aggregate data based upon market transactions.

The table below shows the outstanding swap quantities used to hedge forecasted purchases and sales as of March 31, ~~2019~~2020 and March 31, ~~2018:~~2019:



Hedge Contracts	Classification	March 31, 2020		March 31, 2019
Natural gas (in mmbtus)	Commodity purchase swaps	52,464,000		56,894,000
Tin (in metric tons)	Commodity purchase swaps	870		1,475
Zinc (in metric tons)	Commodity purchase swaps	21,044		13,651
Electricity (in megawatt hours)	Commodity purchase swaps	1,024,000		—
Foreign currency (in millions of euros)	Foreign exchange forwards	€	259	€	296
Foreign currency (in millions of CAD)	Foreign exchange forwards	C$	23	C$	48

Hedge Contracts Classification March 31, 2019 March 31, 2018
Natural gas (in mmbtus) Commodity purchase swaps 56,894,000
17,711,000
Tin (in metric tons) Commodity purchase swaps 1,475
690
Zinc (in metric tons) Commodity purchase swaps 13,651
10,627
Hot-rolled coils (in tons) Sales swaps —
78,000
Foreign currency (in millions of euros) Foreign exchange forwards € 296
€ 251
Foreign currency (in millions of CAD) Foreign exchange forwards C$ 48
C$ —

The following summarizes the fair value amounts included in our Condensed Consolidated Balance Sheets as of March 31, ~~2019~~2020 and December 31, ~~2018:~~2019:



(In millions) Designated as Hedging Instruments	Balance Sheet Location	March 31, 2020	December 31, 2019
Commodity purchase swaps	Accounts receivable	2	1
Commodity purchase swaps	Accounts payable	27	17
Commodity purchase swaps	Investments and long-term receivables	—	1
Commodity purchase swaps	Other long-term liabilities	5	7
Foreign exchange forwards	Accounts receivable	6	—
Foreign exchange forwards	Accounts payable	2	1

Not Designated as Hedging Instruments
Commodity purchase swaps	Accounts payable	1	—
Commodity purchase swaps	Other long-term liabilities	1	—
Foreign exchange forwards	Accounts receivable	3	4

(In millions) Designated as Hedging Instruments Balance Sheet Location March 31, 2019 December 31, 2018
Sales swaps Accounts payable $ —
$ 1
Commodity purchase swaps Accounts receivable 5
2
Commodity purchase swaps Accounts payable 1
17
Commodity purchase swaps Investments and long-term receivables 3
—
Commodity purchase swaps Other long-term liabilities 3
1
Foreign exchange forwards Accounts payable 1
1
Foreign exchange forwards Other long-term liabilities 1
1

Not Designated as Hedging Instruments
Foreign exchange forwards Accounts receivable 14
12

The table below summarizes the effect of hedge accounting on AOCI and amounts reclassified from AOCI into earnings for the three months ended March 31, ~~2019~~2020 and ~~2018:~~2019:


	Gain (Loss) on Derivatives in AOCI						Amount of Gain (Loss) Recognized in Income					Gain (Loss) on Derivatives in AOCI				Amount of Gain (Loss) Recognized in Income
(In millions)	March 31, 2019		March 31, 2018			Location of Reclassification from AOCI ^(a)	March 31, 2019			March 31, 2018		Three Months Ended March 31, 2020		Three Months Ended March 31, 2019	Location of Reclassification from AOCI ^(a)	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Sales swaps ^(b)	$	1	$	(9	)	Net sales	$	(1	)	$	—
Commodity purchase swaps	18		(7		)	Cost of sales ^(c)	(4		)	5		(8	)	18	Cost of sales ^(b)	(8	)	(4	)
Foreign exchange forwards	1		—			Cost of sales	—			—		5		1	Cost of sales	—		—

^(a) The earnings impact of our hedging instruments substantially offsets the earnings impact of the related hedged items since ineffectiveness is less than $1 million.

^(b)~~U. S. Steel elected hedge accounting prospectively for iron ore pellet sales swaps on January 1, 2019.~~

^(c)Costs for commodity purchase swaps are recognized in cost of sales as products are sold.

The table below summarizes the impact of derivative activity where hedge accounting has not been elected on our Condensed Consolidated Statement of Operations for the three months ended March 31, ~~2019~~2020 and ~~2018:~~

2019:


		Amount of Gain (Loss) Recognized in Income						Amount of Gain (Loss) Recognized in Income
(In millions)	Consolidated Statement of Operations Location	March 31, 2019		March 31, 2018			Statement of Operations Location	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Sales swaps ^(a)	Net sales	$	—	$	(1	)
Commodity purchase swaps	Cost of sales	—		1
Commodity purchase swaps ^(a)							Cost of sales	(2	)	—
Foreign exchange forwards	Other financial costs	9		(6		)	Other financial costs	4		9

^(a)~~U. S. Steel elected hedge accounting prospectively for iron ore pellet sales~~ In January 2020, we began utilizing commodity purchase swaps ~~on January 1, 2019.~~to mitigate variable electricity price risk at our Gary Works location.

At current contract values, $3$21 million currently in AOCI as of March 31, ~~2019~~2020 will be recognized as ~~a decrease~~an increase in cost of sales over the next year as related hedged items are recognized in earnings. The maximum derivative contract duration for commodity purchase swaps where hedge accounting was elected is ~~32 months and the~~21 months. The maximum contract duration for ~~foreign exchange forwards~~commodity purchase swaps where hedge accounting was not elected is 2034 months. ~~There are no outstanding contracts for sales swaps.~~

16. Debt



(In millions)	Interest Rates %	Maturity	March 31, 2020		December 31, 2019
2037 Senior Notes	6.650	2037	$	350	$	350
2026 Senior Notes	6.250	2026	650		650
2026 Senior Convertible Notes	5.000	2026	350		350
2025 Senior Notes	6.875	2025	750		750
Environmental Revenue Bonds	4.875 - 6.750	2024 - 2049	620		620
Fairfield Caster Lease		2022	18		18
Other finance leases and all other obligations		2021 - 2029	75		48
ECA Credit Agreement	Variable	2031	104		—
Amended Credit Facility, $2.0 billion	Variable	2024	1,500		600
UPI Amended Credit Facility	Variable	2020	79		—
USSK Credit Agreement	Variable	2023	384		393
USSK Credit Facilities	Variable	2021	—		—
Total Debt			4,880		3,779
Less unamortized discount and debt issuance costs			165		138
Less short-term debt and long-term debt due within one year			99		14
Long-term debt			$	4,616	$	3,627

(In millions)
Interest
Rates %
Maturity March 31, 2019 December 31, 2018
2037 Senior Notes 6.650 2037 $ 350
$ 350
2026 Senior Notes 6.250 2026 650
650
2025 Senior Notes 6.875 2025 750
750
Environmental Revenue Bonds 5.750 - 6.875 2019 - 2042 400
400
Fairfield Caster Lease 2022 21
22
Other finance leases and all other obligations 2019 - 2025 21
6
Fourth Amended and Restated Credit Agreement Variable 2023 —
—
USSK Credit Agreement Variable 2023 225
229
USSK credit facilities Variable 2021 —
—
Total Debt 2,417
2,407
Less unamortized discount and debt issuance costs 25
26
Less short-term debt and long-term debt due within one year 66
65
Long-term debt $ 2,326
$ 2,316

To the extent not otherwise discussed below, information concerning the senior notes, the Senior Convertible Notes and other listed obligations can be found in Note 17 of the audited financial statements in the United States Steel Corporation Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~2019.

~~Fourth~~ Export Credit Agreement

Funding of U. S. Steel’s vendor supported Export Credit Agreement (ECA) occurred on February 19, 2020. U. S. Steel borrowed $104 million under the ECA as of March 31, 2020. Loan repayments start six months after the starting point of credit as defined in the loan agreement with a total repayment term up to eight years. Loan availability and repayment terms are subject to certain customary covenants and events of default. The purpose of the ECA is to finance equipment purchased for the endless casting and rolling facility under construction at our Mon Valley Works facility in Braddock, Pennsylvania. In response to the decline in demand for our products resulting from the COVID-19 outbreak, we have delayed construction of our endless casting and rolling line at Mon Valley Works. We have also paused our borrowing under the ECA pending an update to the agreement or resumption of construction.

Amended and Restated Credit Agreement

As of March 31, ~~2019~~2020, there ~~were~~ no ~~amounts~~was $1.5 billion drawn under the ~~$1.5~~$2.0 billion Fifth Credit Facility ~~Agreement.~~Agreement (Credit Facility Agreement). U. S. Steel must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent four consecutive quarters when availability under the Credit Facility Agreement is less than the greater of 10 percent of the total aggregate commitments and ~~$150~~$200 million. Based on the most recent four quarters as of March 31, ~~2019,~~2020, we would not have met ~~this covenant. If we are unable to meet this covenant in future periods,~~the fixed charge coverage ratio test; therefore, the amount available to the Company under this facility ~~would be~~is effectively reduced by ~~$150~~$200 million. The availability under the Credit Facility Agreement was $300 million as of March 31, 2020.

The Credit Facility Agreement provides for borrowings at interest rates based on defined, short-term market rates plus a spread based on availability and includes other customary terms and conditions including restrictions on our ability to create certain liens and to consolidate, merge or transfer all, or substantially all, of our assets. The Credit Facility Agreement expires in ~~February 2023.~~October 2024. Maturity may be accelerated 91 days prior to the stated maturity of any outstanding senior debt if excess cash and credit facility availability do not meet the liquidity conditions set forth in the Credit Facility Agreement. Borrowings are secured by liens on certain North American inventory and trade accounts receivable. The value of our inventory and trade accounts receivable less specified reserves calculated with the Amended and Restated Credit Agreement supported the full amount of the facility at March 31, 2020.

The Credit Facility Agreement has customary representations and warranties including, as a condition to borrowing, that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, including representations as to no material adverse change in our business or financial condition that is not disclosed in our last published financial results. The facility also has customary defaults, including a cross-default to material indebtedness of U. S. Steel and our subsidiaries.

U. S. Steel Košice (USSK) ~~credit facilities~~Credit Facilities

At March 31, ~~2019~~,2020, USSK had borrowings of ~~€200~~€350 million (approximately ~~$225~~$384 million) under its €460 million (approximately ~~$517~~$504 million) ~~unsecured~~ revolving credit ~~facility.~~facility (USSK Credit Agreement). The USSK Credit Agreement contains certain USSK specific financial covenants including ~~a maximum net debt to EBITDA ratio and~~ a minimum stockholders' equity to assets ratio and net debt to EBITDA ratio. The covenants are measured semi-annually at June and December each year for the period covering the last twelve calendar months, with the first net debt to EBITDA measurement occurring at June 2021. USSK must maintain a net debt to EBITDA ratio of less than 6.5 as of June 30, 2021 and ~~calculated~~3.5 for semi-annual measurements starting December 31, 2021. If the challenging market conditions in Europe due to COVID-19 persisted for a long period and negatively impacted USSK's projected EBITDA, and if covenant compliance requirements are not amended or waived, it may result in an event of default, under which USSK may not draw upon the facility, and the majority lenders, as ~~set forth~~defined in the USSK Credit Agreement, may cancel any and all commitments, and/or accelerate full repayment of any or all amounts outstanding under the USSK Credit Agreement. IfOn December 23, 2019, USSK ~~does not comply with~~entered into a supplemental agreement that amended the USSK Credit Agreement ~~financial covenants, it may not draw on the facility until the next measurement date, outstanding borrowings may be accelerated, or the margin on outstanding borrowings may be increased.~~ leverage covenant and pledged certain USSK trade receivables and inventory as collateral in support of USSK's obligations.

At March 31, ~~2019,~~2020, USSK had availability of ~~€260~~€110 million (approximately ~~$292~~$120 million) under the USSK Credit Agreement. The USSK Credit Agreement expires in September 2023.

The USSK Credit Agreement contains customary representations and warranties including, as a condition to borrowing, that it met certain financial covenants since the last measurement date, and that all such representations and warranties are true and correct, in all material respects, on the date of the borrowing, and representations as to no material adverse change in our business or financial condition since December 31, 2017. The facility also has customary defaults, including a cross-default upon acceleration of material indebtedness of USSK and its subsidiaries.

At March 31, ~~2019~~,2020, USSK had no0 borrowings under its €20 million and €10 million ~~unsecured~~ credit facilities (collectively, approximately ~~$34~~$33 million) and the availability was approximately ~~$33~~$32 million due to approximately $1 million of customs and other guarantees outstanding.

Each of these facilities bear interest at the applicable inter-bank offer rate plus a margin and contain customary terms and conditions.

USS-POSCO Industries Credit Facility

At March 31, 2020, USS-POSCO Industries (UPI) had borrowings of $79 million under its $110 million revolving credit facility (UPI Amended Credit Facility). Borrowings are secured by liens on certain UPI inventory and trade accounts receivable. The UPI Amended Credit Facility provides for borrowings at interest rates based on defined, short-term market rates plus a spread based on availability and includes other customary terms and conditions. At March 31, 2020, UPI had availability of $13 million under the UPI Amended Credit Facility. The agreement expires in August 2020.

Change in control event

If there is a change in control of U. S. Steel, the following may occur: (a) debt obligations totaling ~~$1,975~~$4,166 million as of March 31, ~~2019~~2020 may be declared due and payable; (b) the Credit Facility Agreement and the USSK credit

facilities may be terminated and any amounts outstanding declared due and payable; and (c) U. S. Steel may be required to either purchase the leased Fairfield Works slab caster for approximately $2119 million or provide a letter of credit to secure the remaining obligation.

17. ~~Asset Retirement Obligations~~

~~U. S. Steel’s asset retirement obligations (AROs) primarily relate to mine, landfill closure and post-closure costs. The following table reflects changes in the carrying values of AROs:~~

(In millions) March 31, 2019 December 31, 2018
Balance at beginning of year $ 60
$ 69
Obligations settled (1 ) (12 )
Accretion expense —
3
Balance at end of period $ 59
$ 60

Certain AROs related to disposal costs of the majority of fixed assets at our integrated steel facilities have not been recorded because they have an indeterminate settlement date. These AROs will be initially recognized in the period in which sufficient information exists to estimate their fair value.

~~18.~~ Fair Value of Financial Instruments

The carrying value of cash and cash equivalents, current accounts and notes receivable, accounts payable, bank checks outstanding, and accrued interest included in the Condensed Consolidated Balance Sheet approximate fair value. See Note 15 for disclosure of U. S. Steel’s derivative instruments, which are accounted for at fair value on a recurring basis.

On October 31, 2019, a wholly owned subsidiary of U. S. Steel purchased a 49.9% ownership interest in Big River Steel. The transaction included a call option (U. S. Steel Call Option) to acquire the remaining 50.1% within the next four years at an agreed-upon price formula, which in years three and four is based on Big River Steel’s achievement of certain metrics that include: free cash flow, product development, safety and the completion of a proposed expansion of Big River Steel's existing manufacturing line. The transaction also included options where the other Big River Steel equity owners can require U. S. Steel to purchase their 50.1% ownership interest (Class B Common Put Option) or require U. S. Steel to sell its ownership interest (Class B Common Call Option) after the U. S. Steel Call Option expires.

All of the options are marked to fair value each period using a Monte Carlo simulation which is considered a Level 3 valuation technique. Level 3 valuation techniques include inputs to the valuation methodology that are considered unobservable and significant to the fair value measurement. The net change in fair value of the options during the three months ended March 31, 2020 resulted in an $11 million decrease to net interest and other financial costs. The financial impact was due to an increase in U. S. Steel’s credit spread partially offset by a lower risk free interest rate and a lower Big River Steel equity value.

The following table shows the change in fair value by option.



(In millions)	Balance Sheet Location	Fair Value asset/(liability) at December 31, 2019			Fair Value Mark to Market gain/(loss)			Fair Value asset/(liability) at March 31, 2020
U. S. Steel Call Option	Investments and Long-Term Receivables	$	166		$	(28	)	$	138
Class B Common Put Option	Deferred credits and other noncurrent liabilities	$	(192	)	$	39		$	(153	)
Class B Common Call Option	Deferred credits and other noncurrent liabilities	$	(2	)	$	—		$	(2	)
Net Mark to Market Impact					$	11

The fair value of the U. S. Steel Call Option and Class B Common Put Option are most significantly impacted by certain unobservable inputs including: Big River Steel’s equity value (Equity Value); and Volatility, which is calculated from the market price movements of certain peer companies. Increases in Equity Value increase the fair value of the U. S. Steel Call Option and decrease the fair value of the Class B Common Put Option. For the period ended March 31, 2020, the equity value was adjusted downward to reflect uncertainty in the market related to COVID-19 impacts. Increases in Volatility increase both the fair value of the U. S. Steel Call Option and the Class B Common Put Option. The Class B Common Put Option is also significantly impacted by U. S. Steel’s credit spread (Credit Spread) which is the estimated premium to borrow money in excess of the risk-free rate considering the subordinated nature of the Class B Common Put Option. Increases in the Credit Spread reduce the fair value of the Class B Common Put Option. See Note 20 of the audited financial statements in the United States Steel Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2019 for further details.

The following table summarizes U. S. Steel’s financial liabilities that were not carried at fair value at March 31, ~~2019~~2020 and December 31, ~~2018~~2019.


	March 31, 2019				December 31, 2018				March 31, 2020				December 31, 2019
(In millions)	Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount
Financial liabilities:
Long-term debt ^(a)	$	2,211	$	2,295	$	2,182	$	2,353	$	4,009	$	4,621	$	3,576	$	3,575

(a) Excludes finance lease obligations.

The ~~following methods and assumptions were used to estimate the~~ fair value of ~~financial instruments included in the table above:~~

~~Long-term~~long-term debt~~: Fair value~~ was determined using Level 2 inputs which were derived from quoted market prices and is based on the yield on public debt where available or current borrowing rates available for financings with similar terms and maturities.

Fair value of the financial liabilities disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

Financial guarantees are U. S. Steel’s only unrecognized financial instrument. For details relating to financial guarantees see Note 22.

~~19.~~

18. Statement of Changes in Stockholders’ Equity

The following table reflects the first three months of ~~2019~~2020 and ~~2018~~2019 reconciliation of the carrying amount of total equity, equity attributable to U. S. Steel and equity attributable to noncontrolling interests:


Three Months Ended March 31, 2019 (In millions)	Total			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock		Treasury Stock			Paid-in Capital		Non- Controlling Interest
Three Months Ended March 31, 2020 (In millions)																			Total			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock		Treasury Stock			Paid-in Capital		Non- Controlling Interest
Balance at beginning of year	$	4,203		$	1,212		$	(1,026	)	$	177	$	(78	)	$	3,917	$	1	$	4,093		$	544		$	(478	)	$	179	$	(173	)	$	4,020	$	1
Comprehensive income (loss):
Net earnings	54			54
Net loss																			(391		)	(391		)
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments	32						32												52						52
Currency translation adjustment	(17		)				(17		)										(23		)				(23		)
Derivative financial instruments	15						15												(5		)				(5		)
Employee stock plans	(40		)							1		(48		)	7				2											(2		)	4
Dividends paid on common stock	(9		)	(9		)													(2		)	(2		)
Cumulative effect upon adoption of lease accounting standard	(2		)	(2		)
Balance at March 31, 2019	$	4,236		$	1,255		$	(996	)	$	178	$	(126	)	$	3,924	$	1
Balance at March 31, 2020																			3,726			151			(454		)	179		(175		)	4,024		1



Three Months Ended March 31, 2019 (In millions)	Total			Retained Earnings			Accumulated Other Comprehensive (Loss) Income			Common Stock		Treasury Stock			Paid-in Capital		Non- Controlling Interest
Balance at beginning of year	$	4,203		$	1,212		$	(1,026	)	$	177	$	(78	)	$	3,917	$	1
Comprehensive income (loss):
Net earnings	54			54
Other comprehensive income (loss), net of tax:
Pension and other benefit adjustments	32						32
Currency translation adjustment	(17		)				(17		)
Derivative financial instruments	15						15
Employee stock plans	2									1		(6		)	7
Common stock repurchased	(42		)									(42		)
Dividends paid on common stock	(9		)	(9		)
Cumulative effect upon adoption of lease accounting standard	(2		)	(2		)
Balance at March 31, 2019	4,236			1,255			(996		)	178		(126		)	3,924		1

Three Months Ended March 31, 2018 (In millions) Total Retained Earnings Accumulated
Other
Comprehensive
(Loss) Income Common
Stock Treasury
Stock Paid-in
Capital Non-
Controlling
Interest
Balance at beginning of year $ 3,321
$ 133
$ (845 ) $ 176
$ (76 ) $ 3,932
$ 1
Comprehensive income (loss):

��

Net earnings 18
18

Other comprehensive income (loss), net of tax:

Pension and other benefit adjustments 46

46

Currency translation adjustment 40

40

Derivative financial instruments (16 )
(16 )

Employee stock plans 39

1
75
(37 )
Dividends paid on common stock (9 ) (9 )

Balance at March 31, 2018 $ 3,439
$ 142
$ (775 ) $ 177
$ (1 ) $ 3,895
$ 1

~~20.~~ 19. Reclassifications from Accumulated Other Comprehensive Income (AOCI)

(In millions) Pension and
Other Benefit
Items Foreign
Currency
Items Unrealized Gain (Loss) on Derivatives Total
Balance at December 31, 2018 $ (1,416 ) $ 403
$ (13 ) $ (1,026 )
Other comprehensive income before reclassifications 63
(17 ) 25
71
Amounts reclassified from AOCI ^(a)
(31 ) —
(10 ) (41 )
Net current-period other comprehensive income 32
(17 ) 15
30
Balance at March 31, 2019 $ (1,384 ) $ 386
$ 2
$ (996 )

Balance at December 31, 2017 $ (1,309 ) $ 463
$ 1
$ (845 )
Other comprehensive income before reclassifications 92
40
(13 ) 119
Amounts reclassified from AOCI ^(a)
(46 ) —
(3 ) (49 )
Net current-period other comprehensive income 46
40
(16 ) 70
Balance at March 31, 2018 $ (1,263 ) $ 503
$ (15 ) $ (775 )



(In millions)	Pension and Other Benefit Items			Foreign Currency Items			Unrealized Gain (Loss) on Derivatives			Total
Balance at December 31, 2019	$	(843	)	$	381		$	(16	)	$	(478	)
Other comprehensive income (loss) before reclassifications	7			(23		)	(17		)	(33		)
Amounts reclassified from AOCI ^(a)	45			—			12			57
Net current-period other comprehensive income (loss)	52			(23		)	(5		)	24
Balance at March 31, 2020	$	(791	)	$	358		$	(21	)	$	(454	)

Balance at December 31, 2018	$	(1,416	)	$	403		$	(13	)	$	(1,026	)
Other comprehensive (loss) income before reclassifications ^(b)	—			(17		)	25			8
Amounts reclassified from AOCI ^(a)(b)	32			—			(10		)	22
Net current-period other comprehensive income (loss)	32			(17		)	15			30
Balance at March 31, 2019	$	(1,384	)	$	386		$	2		$	(996	)

(a)See table below for further details.

(b)The Company previously disclosed in Note 20 to the Condensed Consolidated Financial Statements in its Quarterly Report on Form 10-Q for the period ended March 31, 2019, an increase to AOCI of $63 million in the Other comprehensive income before reclassifications line item and a decrease to AOCI of $31 million in the Amounts reclassified from AOCI line item for the three months ended March 31, 2019 amounts for Pension and Other Benefit Items. These amounts should have been disclosed as an increase to AOCI of $0 million and an increase to AOCI of $32 million, respectively, which have been corrected in the table above. The Company concluded that the errors were not material to the financial statements of any prior annual or interim period and therefore, amendments of previously filed reports are not required. The revision had no impact on the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations, Condensed Consolidated Statements of Cash Flows or the Condensed Consolidated Statements of Comprehensive Income (Loss). Quarterly periods not presented herein will be revised, as applicable, in future filings.

Amount reclassified from AOCI
Three Months Ended March 31,
(In millions) Details about AOCI components 2019 2018
Amortization of pension and other benefit items

Prior service costs ^(a)
$ (7 ) $ (7 )

Actuarial losses ^(a)
(34 ) (39 )
Total pensions and other benefits items (41 ) (46 )
Derivative reclassifications to Consolidated Statements of Operations (13 ) (3 )
Total before tax (54 ) (49 )

Tax benefit ^(b)
13
—
Net of tax $ (41 ) $ (49 )



	Amount reclassified from AOCI ^(b)
(In millions)	Three Months Ended March 31,
Details about AOCI components	2020			2019
Amortization of pension and other benefit items
Prior service costs ^(a)	$	(2	)	$	7
Actuarial losses ^(a)	32			34
UPI Purchase Accounting Adjustment	23			—
Total pensions and other benefits items	53			41
Derivative reclassifications to Condensed Consolidated Statements of Operations	12			(13		)
Total before tax	65			28
Tax provision	(8		)	(6		)
Net of tax	$	57		$	22

~~21.~~ 20. Transactions with Related Parties

Net sales to related parties and receivables from related parties primarily reflect sales of raw materials and steel products to equity investees. Generally, transactions are conducted under long-term contractual arrangements. Related party sales and service transactions were $351 million and $375 million ~~and~~ ~~$328 million~~ for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019, respectively. The transaction to purchase UPI included the assumption of $135 million of accounts payable owed to U. S. Steel for prior sales of steel substrate to UPI. This amount is reflected as a reduction in receivables from related parties on the Company's Condensed Consolidated

Balance Sheet as both the corresponding receivable and payable amounts between U. S. Steel and UPI are eliminated in consolidation upon acquisition. See Note 5 to the Condensed Consolidated Financial Statements for further details.

Purchases from related parties for outside processing services provided by equity investees amounted to $28 million and $9 million ~~and~~ ~~$7 million~~ for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019, respectively. Purchases of iron ore pellets from related parties amounted to ~~$20~~$18 millionand$1720 million for the three months ended March 31, 2020 and 2019, ~~and 2018~~ respectively.

Accounts payable to related parties include balances due to PRO-TEC Coating Company, LLC (PRO-TEC) of $~~115~~91 million and $8082 million at March 31, ~~2019~~2020 and December 31, ~~2018~~2019, respectively for invoicing and receivables collection services provided by U. S. Steel on PRO-TEC's behalf. U. S. Steel, as PRO-TEC’s exclusive sales agent, is responsible for credit risk related to those receivables. U. S. Steel also provides ~~PRO-~~

~~TEC~~PRO-TEC marketing, selling and customer service functions. Payables to other related parties totaled $49 million and $1$2 million at March 31, ~~2019~~2020 and December 31, ~~2018~~2019, respectively.

21. Restructuring and Other Charges



(In millions)	Employee Related Costs			Exit Costs			Total
Balance at December 31, 2019	$	87		$	125		$	212
Additional charges	18			23			41
Cash payments/utilization	(4		)	(4		)	(8		)
Balance at March 31, 2020	$	101		$	144		$	245



(In millions)	March 31, 2020		December 31, 2019
Accounts payable	$	66	$	46
Payroll and benefits payable	73		64
Employee benefits	28		23
Deferred credits and other noncurrent liabilities	78		79
Total	$	245	$	212

22. Contingencies and Commitments

U. S. Steel is the subject of, or party to, a number of pending or threatened legal actions, contingencies and commitments involving a variety of matters, including laws and regulations relating to the environment. Certain of these matters are discussed below. The ultimate resolution of these contingencies could, individually or in the aggregate, be material to the Condensed Consolidated Financial Statements. However, management

believes that U. S. Steel will remain a viable and competitive enterprise even though it is possible that these contingencies could be resolved unfavorably.

U. S. Steel accrues for estimated costs related to existing lawsuits, claims and proceedings when it is probable that it will incur these costs in the future and the costs are reasonably estimable.

Asbestos matters– As of March 31, ~~2019~~2020, U. S. Steel was a defendant in approximately ~~745~~808 active cases involving approximately ~~2,315~~2,400 plaintiffs. The vast majority of these cases involve multiple defendants. ~~At December 31, 2018, U. S. Steel was a defendant in approximately 755 cases involving approximately 2,320 plaintiffs.~~ About 1,540,, or approximately 6764 percent,, of these plaintiff claims are currently pending in jurisdictions which permit filings with massive numbers of plaintiffs. At December 31, 2019, U. S. Steel was a defendant in approximately 800 cases involving approximately 2,390 plaintiffs. Based upon U. S. Steel’s experience in such cases, it believes that the actual number of plaintiffs who ultimately assert claims against U. S. Steel will likely be a small fraction of the total number of plaintiffs.



Period ended	Opening Number of Claims	Claims Dismissed, Settled and Resolved ^(a)	New Claims	Closing Number of Claims
December 31, 2017	3,340	275	250	3,315
December 31, 2018	3,315	1,285	290	2,320
December 31, 2019	2,320	195	265	2,390
March 31, 2020	2,390	90	100	2,400

Period ended Opening
Number
of Claims
Claims
Dismissed,
Settled and Resolved ^(a)
New
Claims Closing
Number
of Claims
December 31, 2016 3,315 225 250 3,340
December 31, 2017 3,340 275 250 3,315
December 31, 2018 3,315 1,285 290 2,320
March 31, 2019 2,320 75 70 2,315

^(a) The period ending December 31, 2018 includes approximately 1,000 dismissed cases previously pending in the State of Texas.

Historically, asbestos-related claims against U. S. Steel fall into ~~three~~3 groups: (1) claims made by persons who allegedly were exposed to asbestos on the premises of U. S. Steel facilities; (2) claims made by persons allegedly exposed to products manufactured by U. S. Steel; and (3) claims made under certain federal and maritime laws by employees of former operations of U. S. Steel.

The amount U. S. Steel accrues for pending asbestos claims is not material to U. S. Steel’s financial condition. However, U. S. Steel is unable to estimate the ultimate outcome of asbestos-related claims due to a number of uncertainties, including: (1) the rates at which new claims are filed, (2) the number of and effect of bankruptcies of other companies traditionally defending asbestos claims, (3) uncertainties associated with the variations in the litigation process from jurisdiction to jurisdiction, (4) uncertainties regarding the facts, circumstances and disease process with each claim, and (5) any new legislation enacted to address asbestos-related claims.

Further, U. S. Steel does not believe that an accrual for unasserted claims is required. At any given reporting date, it is probable that there are unasserted claims that will be filed against the Company in the future. In ~~2018,~~2019, the Company engaged an outside valuation consultant to assist in assessing its ability to estimate an accrual for unasserted claims. This assessment was based on the Company's settlement experience, including recent claims trends. The analysis focused on settlements made over the last several years as these claims are likely to best represent future claim characteristics. After review by the valuation consultant and U. S. Steel management, it was determined that the Company could not estimate an accrual for unasserted claims.

Despite these uncertainties, management believes that the ultimate resolution of these matters will not have a material adverse effect on U. S. Steel’s financial condition.

Environmental matters– U. S. Steel is subject to federal, state, local and foreign laws and regulations relating to the environment. These laws generally provide for control of pollutants released into the environment and require responsible parties to undertake remediation of hazardous waste disposal sites. Penalties may be imposed for noncompliance. Changes in accrued liabilities for remediation activities where U. S. Steel is identified as a named party are summarized in the following table:



(In millions)	Three Months Ended March 31, 2020
Beginning of period	$	186
Accruals for environmental remediation deemed probable and reasonably estimable	1
Obligations settled	(9		)
End of period	$	178

(In millions) Three Months Ended March 31, 2019
Beginning of period $ 187
Accruals for environmental remediation deemed probable and reasonably estimable 1
Obligations settled (4 )
End of period $ 184

Accrued liabilities for remediation activities are included in the following Condensed Consolidated Balance Sheet lines:



(In millions)	March 31, 2020		December 31, 2019
Accounts payable	$	55	$	53
Deferred credits and other noncurrent liabilities	123		133
Total	$	178	$	186

(In millions) March 31, 2019 December 31, 2018
Accounts payable $ 37
$ 37
Deferred credits and other noncurrent liabilities 147
150
Total $ 184
$ 187

Expenses related to remediation are recorded in cost of sales and were immaterial for both three month periods ended March 31, ~~2019~~2020 and March 31, ~~2018.~~2019. It is not ~~presently~~currently possible to estimate the ultimate amount of all remediation costs that might be incurred or the penalties that may be imposed. Due to uncertainties inherent in remediation projects and the associated liabilities, it is reasonably possible that total remediation costs for active matters may exceed the accrued liabilities by as much as 1520 to 2530 percent.

Remediation Projects

U. S. Steel is involved in environmental remediation projects at or adjacent to several current and former U. S. Steel facilities and other locations that are in various stages of completion ranging from initial characterization through post-closure monitoring. Based on the anticipated scope and degree of uncertainty of projects, we categorize projects as follows:

Projects with Ongoing Study and Scope Development - Projects which are still in the development phase. For these projects, the extent of remediation that may be required is not yet known, the remediation methods and plans are not yet developed, and/or cost estimates cannot be determined. Therefore, significant costs, in addition to the accrued liabilities for these projects, are reasonably possible. There are ~~five~~6 environmental remediation projects where additional costs for completion are not currently estimable, but could be material. These projects are at Fairfield Works, Lorain Tubular, USS-POSCO Industries (UPI), the Fairless Plant, Gary Works and the former steelmaking plant at Joliet, Illinois. As of March 31, ~~2019,~~2020, accrued liabilities for these projects totaled $1$2 million for the costs of studies, investigations, interim measures, design and/or remediation. It is reasonably possible that additional liabilities associated with future requirements regarding studies, investigations, design and remediation for these projects could be as much as ~~$25~~$30 million to ~~$40~~$45 million.

Significant Projects with Defined Scope - Projects with significant accrued liabilities with a defined scope. As of March 31, ~~2019,~~2020, there are ~~four~~4 significant projects with defined scope greater than or equal to $5 million each, with a total accrued liability of ~~$142~~$118 million. These projects are Gary Resource Conservation and Recovery Act (RCRA) (accrued liability of ~~$25~~$24 million), the former Geneva facility (accrued liability of ~~$60~~$41 million), the Cherryvale zinc site (accrued liability of ~~$11~~$9 million) and the former Duluth facility St. Louis River Estuary (accrued liability of ~~$46~~$44 million).

Other Projects with a Defined Scope - Projects with relatively small accrued liabilities for which we believe that, while additional costs are possible, they are not likely to be significant, and also include those projects for which we do not yet possess sufficient information to estimate potential costs to U. S. Steel. There are ~~two~~2 other environmental remediation projects which each had an accrued liability of between $1 million and $5 million. The total accrued liability for these projects at March 31, ~~2019~~2020 was $4 million. These projects have progressed through a significant portion of the design phase and material additional costs are not expected.

The remaining environmental remediation projects each have an accrued liability of less than $1 million each. The total accrued liability for these projects at March 31, ~~2019~~2020 was approximately $43 million. We do not foresee material additional liabilities for any of these sites.

Post-Closure Costs – Accrued liabilities for post-closure site monitoring and other costs at various closed landfills totaled $2223 million at March 31, ~~2019~~2020 and were based on known scopes of work.

Administrative and Legal Costs – As of March 31, ~~2019~~2020, U. S. Steel had an accrued liability of $1011 million for administrative and legal costs related to environmental remediation projects. These accrued liabilities were based on projected administrative and legal costs for the next three years and do not change significantly from year to year.

Capital Expenditures – For a number of years, U. S. Steel has made substantial capital expenditures to comply with various regulations, laws and other requirements relating to the environment. In the first three months of ~~2019~~2020 and ~~2018~~,2019, such capital expenditures totaled ~~$16~~$4 million and ~~$13~~$16 million,, respectively. U. S. Steel anticipates making additional such expenditures in the future, which may be material; however, the exact amounts and timing of such expenditures are uncertain because of the continuing evolution of specific regulatory requirements.

EU Environmental Requirements - Under the ~~Emission~~Emissions Trading Scheme (ETS), USSK's final allocation of allowances for the Phase III period, which covers the years 2013 through 2020 is 48 million allowances. ~~We estimate a shortfall of approximately 15 million allowances for the Phase III period.~~ Based on projected total production levels, ~~during Phase III,~~ we started to purchase allowances in the third quarter of 2017 to meet the annual compliance submission in the future. As of March 31, ~~2019,~~2020, we have purchased 12approximately 12.2 million European Union Allowances (EUA) totaling ~~€128~~€141.1 million (approximately ~~$144~~$154.6 million)~~. However, due~~ to ~~a number~~cover the estimated shortfall of ~~variables such as~~emission allowances. We estimate that the ~~future market value of~~total shortfall will be approximately 12.5 million allowances ~~future production levels and future emissions intensity levels, we cannot reliably estimate~~for the Phase III period. The full cost of complying with the ETS regulations ~~at this time.~~will depend on future production levels and future emissions intensity levels.

The EU’s ~~Industry Emission~~Industrial Emissions Directive requires implementation of EU determined best available techniques (BAT) for Iron and Steel production to reduce environmental impacts as well as compliance with BAT associated emission levels. Our most recent ~~broad~~ estimate of ~~future~~total capital expenditures for projects to comply with or go beyond BAT requirements is €138 million (approximately ~~$155 million~~)$151 million) over the ~~2017 to 2020~~actual program period. These costs may be mitigated if USSK complies with certain financial covenants, which are assessed annually. USSK complied with these covenants as of March 31, ~~2019.~~2020. If we are unable to meet these covenants in the future, USSK might be required to provide additional collateral (e.g. bank guarantee) to secure the full value of estimated expenditures. There could be increased operating costs associated with these projects, such as increased energy and maintenance costs. We are currently unable to reliably estimate what the increase in operating costs will be as many projects are in the development stage.

Environmental indemnifications – Throughout its history, U. S. Steel has sold numerous properties and businesses and many of these sales included indemnifications and cost sharing agreements related to the assets that were divested. These indemnifications and cost sharing agreements have included provisions related to the condition of the property, the approved use, certain representations and warranties, matters of title, and

environmental matters. While most of these provisions have not specifically dealt with environmental issues, there have been transactions in which U. S. Steel indemnified the buyer for clean-up or remediation costs relating to the business sold or its then existing conditions or past practices related to non-compliance with environmental laws. Most of the recent indemnification and cost sharing agreements are of a limited nature, only applying to non-compliance with past and/or current laws. Some indemnifications and cost sharing agreements only run for a specified period of time after the transactions close and others run indefinitely. In addition, current owners or operators of property formerly owned or operated by U. S. Steel may have common law claims and cost recovery and contribution rights against U. S. Steel related to environmental matters. The amount of potential environmental liability associated with these transactions and properties is not estimable due to the nature and extent of the unknown conditions related to the properties divested and deconsolidated. Aside from the environmental liabilities already recorded as a result of these transactions due to specific environmental remediation activities and cases (included in the ~~$184~~$178 million of accrued liabilities for remediation discussed above), there are no other known probable and estimable environmental liabilities related to these transactions.

Guarantees – The maximum guarantees of the indebtedness of unconsolidated entities of U. S. Steel totaled $4 million at March 31, ~~2019~~2020.

Other contingencies– Under certain operating lease agreements covering various equipment, U. S. Steel has the option to renew the lease or to purchase the equipment at the end of the lease term. If U. S. Steel does

not exercise the purchase option by the end of the lease term, U. S. Steel guarantees a residual value of the

equipment as determined at the lease inception date (totaling approximately $1726 million at March 31, ~~2019~~2020). NoNaN liability has been recorded for these guarantees as the potential loss is not probable.

Insurance– U. S. Steel maintains insurance for certain property damage, equipment, business interruption and general liability exposures; however, insurance is applicable only after certain deductibles and retainages. U. S. Steel is self-insured for certain other exposures including workers’ compensation (where permitted by law) and auto liability. Liabilities are recorded for workers’ compensation and personal injury obligations. Other costs resulting from losses under deductible or retainage amounts or not otherwise covered by insurance are charged against income upon occurrence.

U. S. Steel uses surety bonds, trusts and letters of credit to provide whole or partial financial assurance for certain obligations such as workers’ compensation. The total amount of active surety bonds, trusts and letters of credit being used for financial assurance purposes was approximately $~~180~~170 million as of March 31, ~~2019~~2020, which reflects U. S. Steel’s maximum exposure under these financial guarantees, but not its total exposure for the underlying obligations. A significant portion of our trust arrangements and letters of credit are collateralized by our Credit Facility Agreement. The remaining trust arrangements and letters of credit are collateralized by restricted cash. Restricted cash, which is recorded in other current and noncurrent assets, totaled $33147 million and $40190 million at March 31, ~~2019~~2020 and December 31, ~~2018~~2019, respectively.

Capital Commitments– At March 31, ~~2019~~2020, U. S. Steel’s contractual commitments to acquire property, plant and equipment totaled $~~690~~895 million.

Contractual Purchase Commitments – U. S. Steel is obligated to make payments under contractual purchase commitments, including unconditional purchase obligations. Payments for contracts with remaining terms in excess of one year are summarized below (in millions):



Remainder of 2020	2021	2022	2023	2024	Later Years	Total
$568	$675	$568	$335	$108	$612	$2,866

Remainder of 2019 2020 2021 2022 2023 Later
Years Total
$554 $605 $389 $322 $312 $730 $2,912

The majority of U. S. Steel’s unconditional purchase obligations ~~relates~~relate to the supply of industrial gases, and certain energy and utility services with terms ranging from two to 1416 years. Unconditional purchase obligations also include coke and steam purchase commitments related to a coke supply agreement with Gateway Energy & Coke Company LLC (Gateway) under which Gateway is obligated to supply a minimum volume of the expected targeted annual production of the heat recovery coke plant, and U. S. Steel is obligated to purchase the coke from Gateway at the contract price. As of March 31, ~~2019~~2020, if U. S. Steel were to terminate the agreement, it may be obligated to pay in excess of $~~137~~131 million.

Total payments relating to unconditional purchase obligations were $168 million and $158 million ~~and~~ ~~$161 million~~ for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019, respectively.

23. Significant Equity Investments

Summarized unaudited income statement information for our significant equity investments for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 is reported below (amounts represent 100% of investee financial information):



(In millions)	2020		2019
Net sales	$	317	$	299
Cost of sales	287		259
Operating income	17		28
Net earnings	10		25
Net earnings attributable to significant equity investments	10		25

(In millions) 2019 2018
Net sales $ 299
$ 261
Cost of sales 259
235
Operating income 28
15
Net earnings 25
12
Net earnings attributable to significant equity investments 25
12

U. S. Steel's portion of the equity in net earnings of the significant equity investments above was ~~$14~~$6 million and $8$14 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, which is included in the earnings from investees line on the Condensed Consolidated Statement of Operations.

24. Common Stock Repurchase Program

In November 2018, U. S. Steel announced a two year common stock repurchase program that ~~allows~~allowed for the repurchase of up to $300 million of its outstanding common stock from time to time in the open market or privately negotiated transactions at the discretion of management. During the ~~quarter~~three months ended March 31, 2019, U. S. Steel repurchased 2,115,875 shares of common stock for approximately $42 million. In December 2019, the Board of Directors terminated the authorization for the common stock repurchase program.

25. Subsequent Events

Flat-Rolled Operating Configuration

In April of 2020, U. S. Steel announced operational adjustments across its North American footprint, including idling its Keetac Iron Ore Operations, Blast Furnaces #6 and #8 at Gary Works and Blast Furnace #1 at Mon Valley Works, reductions to coke production at its Clairton Plant, and reduced operating levels in the Tubular business and other production facilities, for an indefinite period of time. Additionally, U. S. Steel will adjust production at its Minntac operations in line with the blast furnace idlings. These actions will be taken to further enhance U. S. Steel’s ability to preserve cash and liquidity given the continued uncertainty from the coronavirus (COVID-19) and the continued headwinds in global oil and gas markets. As a result, we expect to record one-time restructuring charges of ~~March 31, 2019, there is~~ approximately ~~$183~~$40 million ~~remaining~~to $50 million in the second quarter of 2020. Operating configurations are continuously being evaluated to properly respond to ever changing conditions. If further operational adjustments are made, additional one-time restructuring charges will be incurred.

USSK Labor Productivity Strategy

In April of 2020, USSK amended its labor agreement to include a Voluntary Early Retirement Program (VERP) that will be offered to certain employees of USSK. Employees can elect early retirement under the ~~share repurchase authorization.~~VERP between May 4, 2020 and May 22, 2020 with a termination date of June 30, 2020 for most employees. Special termination benefit charges of $25 million to $35 million are expected to be recorded in the second quarter of 2020 related to this VERP.

Minntac Mine Option Agreement

On April 30, 2020 (the Effective Date), the Company entered into an Option Agreement (Option Agreement) with Stelco Inc., a corporation governed under the laws of Canada (Stelco), pursuant to which, among other things, the Company granted Stelco the option (Option) to acquire an undivided 25% interest (the Option Interest) in a to-be-formed entity (the Joint Venture) that will own the Company’s current iron ore mine located in Mt. Iron, Minnesota (the Minntac Mine). As consideration for the Option, Stelco will pay the Company an aggregate amount of $100 million in 5 $20 million installments, which began on the Effective Date and will end on or before December 31, 2020 (the date upon which the final installment is paid, the Final Payment Date). In the event Stelco exercises the Option, Stelco will contribute an additional $500 million to the Joint Venture, and the parties will engage in good faith negotiations to finalize the master agreement (pursuant to which Stelco will acquire the Option Interest) and the limited liability company agreement of the Joint Venture. Concurrently with, and subject to, the execution and delivery of the Option Agreement, the Company and Stelco also entered into an Amended and Restated Pellet Sale and Purchase Contract.

Subject to the terms and conditions of the Option Agreement, Stelco may exercise the Option at any time during the period commencing on the Final Payment Date and expiring at 11:59 p.m. Eastern Time on January 31, 2027 unless earlier terminated.



Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

U. S. Steel's results in the first quarter of 2020 were significantly impacted by market challenges in each of the Company's three reportable segments: North American Flat-Rolled (Flat-Rolled), U. S. Steel Europe (USSE) and Tubular Products (Tubular). In Flat-Rolled, the results were largely impacted by the reset of calendar year fixed contract prices and lost shipments at quarter end due to many customers ceasing operations due to restrictions put in place in response to the coronavirus (COVID-19) pandemic. USSE continues to experience margin compression due to ongoing weak performance of the manufacturing sector and continued high levels of imports. In Tubular, the COVID-19 outbreak and the disruptions in the oil and gas industry are negatively impacting the market.

Net sales by segment for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 are set forth in the following table:


	Three Months Ended March 31,						Three Months Ended March 31,
(Dollars in millions, excluding intersegment sales)	2019		2018		% Change		2020		2019		% Change
Flat-Rolled Products (Flat-Rolled)	$	2,405	$	2,046	18	%
U. S. Steel Europe (USSE)	737		823		(10	)%
Tubular Products (Tubular)	343		266		29	%
Flat-Rolled							$	1,974	$	2,405	(18	)%
USSE							505		737		(31	)%
Tubular							255		343		(26	)%
Total sales from reportable segments	3,485		3,135		11	%	2,734		3,485		(22	)%
Other Businesses	14		14		—	%	14		14		—	%
Net sales	$	3,499	$	3,149	11	%	$	2,748	$	3,499	(21	)%

Management’s analysis of the percentage change in net sales for U. S. Steel’s reportable business segments for the three months ended March 31, ~~2019~~2020 versus the three months ended March 31, ~~2018~~2019 is set forth in the following table:

~~Three Months Ended March 31, 2019 versus Three Months Ended March 31, 2018~~

Pension and other benefit costs (other than service cost) are reflected within net interest and other financial costs and the service cost component is reflected within cost of sales in the Condensed Consolidated ~~Statement~~Statements of Operations.

Defined benefit and multiemployer pension plan costs included in cost of goods sold totaled ~~$29~~$33 million and ~~$27~~$29 million in the three months ended March 31, ~~2019~~2020 and ~~March 31, 2018,~~2019, respectively.

Other benefit expense included in cost of sales totaled $3 million in both the three months ended March 31, 2020and $42019.

Selling, general and administrative expenses were $72 million and $78 million in the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019 respectively.

~~Selling, general and administrative expenses~~

~~Selling, general and administrative expenses were $78 million in both of~~During the three months ended March 31, ~~2019~~2020, the Company recorded restructuring and ~~March 31, 2018.~~other charges of $41 million, which consists of charges of $22 million for the indefinite idling of a significant portion of Great Lakes Works, $13 million for the indefinite idling of our of Lone Star Tubular Operations and Lorain Tubular Operations and $6 million for Company-wide headcount reductions.

Charges for restructuring initiatives are recorded in the period the Company commits to a restructuring plan, or executes specific actions contemplated by the plan and all criteria for liability recognition have been met. Charges related to restructuring are reported in restructuring and other charges in the Condensed Consolidated Statements of Operations.

The Company expects to invest approximately $500 million, of which approximately 40 percent has already been spent, to upgrade the Gary Works hot strip mill through a series of projects focused on expanding the line's competitive

advantages. The Gary Works hot strip mill will further differentiate itself as a leader in heavy-gauge products in strategic markets. The Company currently has paused planned upgrades and will continue to evaluate the pace and timeline for completing the remaining investments in the Gary Works hot strip mill.

approximately $275 million upon completion. The ~~installation of endless casting~~Company continues to evaluate design and rolling technology will give U. S. Steel a world-class asset that will improve the quality and attributes of its downstream products for customers in appliance, construction and industrial markets. With this investment, Mon Valley Works will become the principal source of substrateengineering for the ~~production of the Company's industry-leading XG3~~^TM ~~Advanced High Strength Steel (AHSS) that assists automotive customers in meeting fuel efficiency standards.~~project. The cogeneration facility, equipped with state-of-the-art emissions control systems at the Company's Clairton Plant, will convert a portion of the coke oven gas generated at its Clairton Plant into electricitycompany currently expects groundbreaking for this project to ~~power the steelmaking and finishing facilities throughout U. S. Steel's Mon Valley operations.~~

This project, in addition to producing sustainable AHSS, will improve environmental performance, energy conservation and reduce our carbon footprint associated with Mon Valley Works. First coil production is expected in 2022, contingent upon permitting and construction.

be delayed for an indeterminate period until market conditions become more certain.

The Company has adjusted its operating configuration in response to changing market conditions including the economic impacts from the COVID-19 pandemic, significant recent changes in global oil and gas markets and increasing global overcapacity and unfairly traded imports by indefinitely and temporarily idling certain of its facilities. U. S. Steel will continue to adjust its operating configuration in order to align production with its order book and meet the needs of our customers.

Additionally, U. S. Steel will reduce coke production at its Clairton Plant and will adjust production at its Minntac operations in line with the blast furnace idlings. U. S. Steel will reduce operating levels in the Tubular business and other production facilities and will continue to evaluate its operating configuration to properly respond to ever changing conditions. When market conditions improve, we will assess the footprint required to support our customers’ needs and make decisions about resuming production at idled facilities or increasing production at facilities operating at reduced levels.

In December 2019, U. S. Steel announced that it ~~will restart~~would indefinitely idle a significant portion of Great Lakes Works. The Company began idling the ~~No.~~iron and steelmaking facilities in March 2020 and expects to begin idling the hot strip mill rolling facility before the end of 2020. The carrying value of the Great Lakes Works facilities that we intend to indefinitely idle was approximately $370 million as of March 31, 2020.

In December 2019, the Company completed the indefinite idling of its East Chicago Tin (ECT) operations within its Flat-Rolled segment. ECT was indefinitely idled primarily due to increased tin import levels in the U.S. Additionally, U. S. Steel indefinitely idled its finishing facility in Dearborn, Michigan (which operates an electrolytic galvanizing line), during the fourth quarter of 2019. The carrying value of these facilities was approximately $20 million as of March 31, 2020.

In October 2019, the Company announced an enhanced operating model and organizational structure to accelerate the Company’s strategic transformation and better serve its customers. The new operating model was effective January 1, ~~Electric-Weld Pipe Mill at its Lone Star Tubular Operations, which will enable~~2020 and is centered around manufacturing, commercial, and technological excellence. Our former “commercial entity” structure was put into place to deepen understanding of business ownership and our relationships with customers and allowed the Company to ~~support increased demand for high-quality electric-welded pipe produced~~identify the technology that would differentiate our products and processes on the basis of cost and/or capabilities. The new enhanced operating model is a logical next step in the ~~United States. The restart is expected~~execution of the Company’s strategy and will make us a more nimble company positioned to ~~occur in~~deliver the ~~third quarter~~benefits of ~~2019.~~our strategy through the cycle.

In ~~June and October 2018,~~July 2019, U. S. Steel ~~restarted the "B" blast furnace and steelmaking facilities and the "A" blast furnace, respectively,~~began implementing a labor productivity strategy at ~~its Granite City Works facility. As a result of the restarts, the Company is~~USSK so that it could better ~~able to serve our customers during planned asset revitalization efforts and support increased demand for steel produced~~compete in the ~~United States~~European steel market, which has experienced softening demand as well as a significant increase in imports. It is anticipated that the labor productivity strategy will result in total headcount reductions, including contractors, of approximately 2,500 by the ~~Section 232 investigation into steel imports.~~end of 2021. As of March 31, 2020, approximately 1,950 positions, including approximately 425 contractors, were eliminated.

~~Better operating performance in our Flat-Rolled segment, coupled with relatively stable~~resume when market conditions ~~during 2018 and 2019, have resulted in improved segment results in~~improve. As of March 31, 2020 the ~~recent quarter. As we continue with the implementation~~carrying value of our asset revitalization program, described below, and increase investment in our facilities, we expect the sustainable improvements in safety, quality, delivery and costs we are targeting to position us to succeed over the long term, and support future growth initiatives.this idled blast furnace was $10 million.

Segment results for USSE

Segment results for Tubular

Other Businesses had earnings of $1 million and $8 million in the three months ended March 31, 2020 and 2019,~~, compared~~ respectively.

We recorded tubular asset impairment charges of ~~$11~~$263 million in the three months ended March 31, ~~2018~~.2020 as described in Notes 1 and 10 to the Condensed Consolidated Financial Statements.

~~Items not allocated~~

We recorded a $25 million gain on our previously held investment in UPI in the three months ended March 31, 2020 as described in Note 5 to ~~segments~~the Condensed Consolidated Financial Statements.

We recorded in the three months ended March 31, 2020 restructuring and other charges of $41 million as described under the "Restructuring and other charges" headingabove.

We incurred $31 million of costs associated with the December 24, 2018 Clairton coke making facility fire in the three months ended March 31, 2019 (see Environmental Matters, Litigation and Contingencies in the Liquidity and Capital Resources section for more details).

~~We recorded a $10 million favorable adjustment in the three months ended March 31, 2018 related to~~ ~~Granite City Works temporary idling charges~~ ~~as a result of the decision to restart the "B" blast furnace and steelmaking facilities at this facility in 2018.~~

The decrease in net interest and other financial costs in the three months ended March 31, ~~2019~~2020 as compared to the same period last year is primarily due to ~~the loss on debt extinguishment in the three months ended March 31, 2018 as described below, reduced interest expense due to our improved debt profile and foreign exchange gains.~~

The ~~pension cost projection includes approximately $72 million of contributions to the Steelworkers Pension Trust.~~

~~The~~ income tax (benefit) provision was $(19) million and $8 million in the three months ended March 31, 2020 and 2019, ~~compared~~respectively. In general, the amount of tax expense or benefit from continuing operations is determined without regard to the tax effect of other categories of income or loss, such as other comprehensive income. However, an exception to this rule applies when there is a ~~provision of $1 million~~loss from continuing operations and income from other categories. Included in the tax benefit in the first three months ~~ended~~ ~~March 31, 2018. The~~of 2020 is a discrete benefit of $10 million related to this accounting exception. Due to the full valuation allowance on our domestic deferred tax ~~provision~~assets, the tax benefit in ~~both periods~~2020 does not reflect any additional tax benefit for domestic pretax losses. In 2019, the tax provision reflects a benefit for percentage depletion in excess of cost depletion ~~for~~from iron ore that we produce and consume or sell. ~~In 2018, the tax provision also reflects a tax benefit for the release of a portion of the valuation allowance due to pretax income.~~

BALANCE SHEET

~~Accounts receivable~~Cash increased by ~~$70~~$601 million from year-end ~~2018 primarily due to increased receivable balances under our invoicing and receivables collection services arrangement provided by U. S. Steel on PRO-TEC’s behalf.~~

~~Inventories~~ ~~increased by $41 million from year-end 2018~~2019 primarily as a result of ~~higher raw materials prices~~borrowings on our revolving credit facilities. See Note 7 to the Condensed Consolidated Financial Statements for further details.

Receivables from related parties decreased by $134 million primarily from the transaction to purchase USS-POSCO Industries (UPI) which included the assumption of $135 million of accounts payable owed to U. S. Steel for prior sales of steel substrate to UPI. This amount is reflected as a reduction in ~~our Flat-rolled segment.~~receivables from related parties as both the corresponding receivable and payable amounts between U. S. Steel and UPI are eliminated in consolidation upon acquisition. See Note 5 to the Condensed Consolidated Financial Statements for further details.

~~Operating lease assets~~Inventories increased by ~~$234~~$290 million from year-end 2019 primarily as a result of decreased sales and the addition of the UPI inventory amount to our Condensed Consolidated Balance Sheet.

Property, plant and equipment, net decreased by $40 million from year-end ~~2018~~2019 primarily due to a $196 million write-down of impaired welded tubular assets (see Note 1 to the Condensed Consolidated Financial Statements for further details) partially offset by additional property, plant and equipment of $97 million due to the consolidation of UPI as a result of the ~~adoption~~acquisition of the ~~new accounting standard for leases (see Note 8 for further details).~~

~~Property, plant~~remaining 50% ownership interest and ~~equipment, net~~ ~~increased by $124 million due to~~ the level of capital expenditures exceeding depreciation expense.

~~Payroll and benefits payable~~ Intangibles - netdecreased by ~~$107~~$16 million from year-end ~~2018~~2019 primarily due to ~~profit-based incentive payments~~a $67 million write-down of impaired welded tubular intangible assets partially offset by an acquired intangible asset of $54 million related to ~~2018 financial performance that were paid in March of 2019.~~a UPI electricity contract. See Note 10 to the Condensed Consolidated Financial Statements for further details.

~~Current operating lease~~Accounts payable and other accrued liabilities increased by ~~$53~~$79 million from year-end ~~2018~~2019 primarily as a result of an increase in the ~~adoption of the new accounting standard for leases (see Note 8 for further details).~~days in accounts payable cash conversion cycle.

~~Non current~~Current portion of ~~operating lease liabilities~~long-term debt increased by ~~$185~~$85 million from year-end ~~2018~~2019 primarily as a result of adding the ~~adoption~~UPI Amended Credit Facility acquired through U. S. Steel's purchase of the ~~new accounting standard for leases (see~~50% ownership interest in UPI.

Long-term debt, less unamortized discount and debt issuance costs increased by $989 million from year-end 2019 primarily due to borrowings on the Fifth Credit Facility Agreement. See Note 816 to the Condensed Consolidated Financial Statements for further ~~details).~~details.

Employee benefits increased by $52 million from year-end 2019 primarily as a result of adding the UPI other postretirement employee benefit plans to our Condensed Consolidated Balance Sheet.

Deferred credits and other noncurrent liabilities decreased by $86 million primarily from liabilities eliminated as a result of U. S. Steel's purchase of the 50% ownership interest in UPI and the change in value of the put option acquired with our purchase of Big River Steel.

CASH FLOW

Net cash ~~provided~~used by operating activities was ~~$29~~$142 million for the three months ended March 31, ~~2019~~2020 compared to net cash ~~used in~~provided by operating activities of ~~$(99)~~$29 million in the same period last year. The ~~increase~~decrease in cash from operations is primarily due to ~~stronger~~lower financial results, ~~favorable~~partially offset by changes in working capital ~~and prior year federal income tax refunds.~~period over period.

Changes in working capital can vary significantly depending on factors such as the timing of inventory production and purchases, which is affected by the length of our business cycles as well as our captive raw materials position, customer payments of accounts receivable and payments to vendors in the regular course of business.

Our key working capital components include accounts receivable and inventory. The accounts receivable and inventory turnover ratios for the three months and twelve months ended March 31,2020 and 2019 are as follows:



	Three Months Ended March 31,		Twelve Months Ended March 31,
	2020	2019	2020	2019
Accounts Receivable Turnover	2.3	2.1	8.4	8.8
Inventory Turnover	1.3	1.5	5.5	6.4

The increase in the accounts receivable turnover approximates 5 days for the three months ended March 31, 2020 as compared to the same period ended March 31, 2019 and ~~2018 are as follows:~~

Three Months Ended
March 31, Twelve Months Ended
March 31,
2019 2018 2019 2018
Accounts receivable turnover 2.1
2.1
8.8
8.5
Inventory turnover 1.5
1.6
6.4
6.3

is primarily due to receivable collections exceeding the decrease in sales from lower shipments and average realized prices across all of our segments. The decrease in the accounts receivable turnover ~~and inventory turnover remained consistent~~approximates 2 days for ~~both~~ the ~~three month and~~ twelve ~~month periods~~months ended March 31, ~~2019.~~2020 as compared to the same period ended March 31, 2019 and is primarily due to decreased sales as a result of lower shipments and average realized prices across all of our segments.

The decrease in the inventory turnover approximates 7 days and 10 days for the three and twelve months ended March 31, 2020 as compared to the three months and twelve months ended March 31, 2019, respectively, and is primarily due to decreased shipments across all our segments.

The last-in, first-out (LIFO) inventory method is the predominant method of inventory costing in the United States. ~~At both March 31, 2019 and March 31, 2018, the~~The LIFO method accounted for 65 percent and 73 percent of total inventory ~~values.~~values at the three months ended March 31, 2020 and 2019 respectively. In the U.S., management monitors inventory realizability by comparing the LIFO cost of inventory with the replacement cost of inventory. To the extent the replacement cost (i.e., market value) of inventory is lower than the LIFO cost of inventory, management will write the inventory down. As of March 31, ~~2019~~2020, and December 31, ~~2018~~2019 the replacement cost of the inventory was higher by approximately ~~$1,159~~$762 million and ~~$1,038~~$735 million, respectively. Additionally, based on the Company’s latest internal forecasts and its inventory requirements, management does not believe there will be significant permanent LIFO liquidations that would impact earnings for the remainder of ~~2019.~~2020.

Our cash conversion cycle for the first quarter of ~~2019 increased from~~2020 decreased by one day as compared to the fourth quarter of ~~2018~~2019 as shown below:


Cash Conversion Cycle	2019			2018			2020		2019
	$ millions		Days	$ millions		Days	$ millions	Days	$ millions	Days
Accounts receivable, net ^(a)	$	1,729	43	$	1,659	42	$1,172	39	$1,177	42

+ Inventories ^(b)	$	2,133	60	$	2,092	58	$2,075	68	$1,785	64

- Accounts Payable and Other Accrued Liabilities^(c)	$	2,478	70	$	2,477	72	$2,075	71	$1,970	69


= Cash Conversion Cycle ^(d)			33			28		36		37

^(a)Calculated as Average Accounts Receivable, net divided by total Net Sales multiplied by the number of days in the period.

^(b)Calculated as Average Inventory divided by total Cost of Sales multiplied by the number of days in the period.

^(c)Calculated as Average Accounts Payable and Other Accrued Liabilities less bank checks outstanding and other current liabilities divided by total Cost of Sales multiplied by the number of days in the period.

^(d)Calculated as Accounts Receivable Days plus Inventory Days less Accounts Payable Days.

The cash conversion cycle is a non-generally accepted accounting principles (non-GAAP) financial measure. We believe the cash conversion cycle is a useful measure in providing investors with information regarding our cash management performance and is a widely accepted measure of working capital management efficiency. The cash conversion cycle should not be considered in isolation or as an alternative to other GAAP metrics as an indicator of performance.

~~Capital expenditures~~ ~~for~~



CAPITAL EXPENDITURES	Three Months Ended March 31,
(dollars in millions)	2020	2019
Flat-Rolled ^(a)	192	247
U. S. Steel Europe	34	34
Tubular	54	19
Other Businesses	2	2
Total	282	302

For the three months ended March 31, ~~2019,~~2020, capital expenditures were ~~$302~~$282 million, compared with ~~$208~~$302 million in the same period in ~~2018. Flat-rolled~~2019. Flat-Rolled capital expenditures were ~~$247~~$192 million and included spending for ~~the~~ Mon Valley ~~No. 3 Blast Furnace outage,~~

~~Capital expenditures for 2019 are expected~~

Revolving credit facilities - borrowings, net of financing costs totaled $1,202 million primarily due to ~~total approximately $1.3 billion and remain focused largely~~borrowings on ~~strategic projects (including~~ the Fairfield EAF project), infrastructure and environmental projects, as well as asset revitalization of our equipment to improve our operating reliability and efficiency, and product quality and cost by focusing on investments in our North American Flat-Rolled segment.Fifth Credit Facility Agreement.

~~Common stock repurchased~~ ~~under our common stock repurchase program approved in 2018~~ ~~totaled 2,115,875 shares and approximately $42 million in the quarter ended March 31, 2019. See Note 24 to the Consolidated Financial Statements for further details.~~

Issuance of long-term debt, net of financing costs totaled ~~$640~~$67 million primarily due to borrowings under our Export Credit Agreement.

Revolving credit facilities - repayments totaled $281 million in the three months ended March 31, ~~2018.~~ 2020 primarily due to repayments on the Fifth Credit Facility Agreement and USSK Credit Agreement.

Long-lived assets – U. S. Steel evaluates long-lived assets, primarily property, plant and equipment for impairment whenever changes in circumstances indicate that the carrying amounts of those productive assets exceed their recoverable amount as determined by the asset group's projected undiscounted cash flows. We evaluate the impairment of long-lived assets at the asset group level. Our primary asset groups are Flat-Rolled, welded tubular, seamless tubular and USSE.

During 2019, the ~~three months~~challenging steel market environment in the U.S. and Europe and recent losses in the welded tubular asset group were considered triggering events for the Flat-Rolled, USSE and welded tubular asset groups. U. S. Steel completed a quantitative analysis of its long-lived assets for these asset groups and determined that the assets were not impaired. The percentage excess of estimated future cash flows over the net assets was greater than 30 percent for our welded tubular asset group. The key assumptions used to estimate the recoverable amounts for the welded tubular asset group were estimates of future commercial prices, commercial program management and efficiency improvements over the 12-year remaining useful life of the primary welded tubular assets. The percentage excess of estimated future cash flows over the net assets was greater than 75 percent for both the Flat-Rolled and USSE asset groups. In 2019, there were no triggering events for the seamless tubular asset group that required long-lived assets to be evaluated for impairment.

For the period ended March 31, ~~2018, U. S. Steel issued $650 million aggregate principal amount~~2020, the steep decline in oil prices that resulted from market oversupply and declining demand was considered a triggering event for the welded tubular and seamless tubular asset groups. A quantitative analysis was completed for both asset groups. The percentage excess of ~~2026 Senior Notes. U. S. Steel received~~estimated future cash flows over the net ~~proceeds from~~assets was greater than 100% for the ~~offering~~seamless tubular asset group but indicated an impairment and required further evaluation of ~~approximately $640 million after fees of approximately $10 million related to underwriting and third party expenses.~~

~~Repayment of long-term debt~~ ~~totaled $538 million~~the net assets in the ~~three months ended~~welded tubular asset group. The liquidation method was used to determine the fair value of the welded tubular assets which resulted in an impairment of $196 million and $67 million to property, plant and equipment and intangibles, respectively. There were no triggering events for the Flat-Rolled and USSE asset groups that required long-lived assets to be evaluated for impairment as of March 31, 2018. During the three months ended March 31, 2018, U. S. Steel repurchased through a tender offer approximately $499 million of its then outstanding $780 million 2021 Senior Secured Notes and paid premiums of $39 million for the tender.2020.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes U. S. Steel’s liquidity as of March 31, ~~2019~~2020:


(Dollars in millions)
Cash and cash equivalents	$	676	$	1,350
Amount available under $1.5 Billion Credit Facility Agreement	1,500
Amount available under $2.0 Billion Credit Facility Agreement			300
Amount available under USSK credit facilities	325		152
UPI Amended Credit Facility			13
Total estimated liquidity	$	2,501	$	1,815

As of March 31, ~~2019~~2020, ~~$152~~$228 million of the total cash and cash equivalents was held by our foreign subsidiaries. Substantially all of the liquidity attributable to our foreign subsidiaries can be accessed without the imposition of income taxes as a result of the election effective December 31, 2013 to liquidate for U.S. income tax purposes a foreign subsidiary that holds most of our international operations.

During March 2020, as a precautionary measure taken to mitigate the potential economic impacts of the COVID-19 pandemic, U. S. Steel increased its borrowings under its Fifth Credit Facility Agreement. As of March 31, ~~2019,~~2020, there ~~were no amounts~~was $1.5 billion drawn under the ~~$1.5~~$2.0 billion Fifth Credit Facility Agreement. U. S. Steel must maintain a fixed charge coverage ratio of at least 1.00 to 1.00 for the most recent four consecutive quarters when availability under the Credit Facility Agreement is less than the greater of 10 percent of the total aggregate commitments and ~~$150~~$200 million. Based on the four quarters as of March 31, ~~2019,~~2020, we would not have met this covenant. IfSo long as we ~~are unable~~continue to not meet this covenant, ~~in future periods,~~ the amount available to the Company is effectively reduced by $200 million. As a result, availability under this facility ~~would be reduced by $150 million. The Credit Facility Agreement expires in February 2023.~~

As of March 31, 2020, USSK had borrowings of ~~€200~~€350 million (approximately ~~$225~~$384 million) under its €460 million (approximately ~~$517~~$504 million) ~~unsecured~~ revolving credit ~~facility (the USSK Credit Agreement).~~facility. The USSK Credit Agreement contains certain USSK financial covenants, including a maximum net debt to EBITDA ratio and a minimum stockholders' equity to assets ratio. The covenants are measured semi-annually at June and December each year for the period covering the last twelve calendar months, with the first net debt to EBITDA measurement occurring at June 2021. USSK must maintain a net debt to EBITDA ratio of less than 6.5 as of June 30, 2021 and 3.5 for semi-annual measurements starting December 31, 2021. If the challenging market conditions in Europe due to COVID-19 persisted for a long period and negatively impacted USSK's projected EBITDA, and if covenant compliance requirements are not amended or waived, it may result in an event of default, under which USSK may not draw upon the facility, and the majority lenders, as defined in the USSK Credit Agreement, may cancel any and all commitments, and/or accelerate full repayment of any or all amounts outstanding under the USSK Credit Agreement.

As of March 31, 2020, we had borrowings of $104 million under the Export Credit Agreement (ECA). Loan repayments start six months after the starting point of credit as defined in the loan agreement with a total repayment term up to eight years. Loan availability and repayment terms are subject to certain customary covenants and events of default. The purpose of the ECA is to finance equipment purchased for the endless casting and rolling facility under construction at our Mon Valley Works facility in Braddock, Pennsylvania. In response to the decline in demand for our products resulting from the COVID-19 outbreak, we have delayed construction of our endless casting and rolling line at Mon Valley Works. We have also paused our borrowing under the ECA pending an update to the agreement or resumption of construction.

Our U.S. facilities are subject to environmental laws applicable in the U.S., including the Clean Air Act (CAA), the Clean Water Act (CWA), the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as well as state and local laws and regulations.

U. S. Steel has incurred and will continue to incur substantial capital, operating, and maintenance and remediation expenditures as a result of environmental laws and regulations, related to release of hazardous materials, which in recent years have been mainly for process changes to meet CAA obligations and similar obligations in Europe.

~~Midwest Plant Incident~~

On April 11, 2017, there was a process waste water release at our Midwest Plant (Midwest) in Portage, Indiana that impacted a water outfall that discharges to Burns Waterway near Lake Michigan. U. S. Steel identified the source of the release and made the necessary repairs. We determined that all repairs were safely working as intended and, on April 14, 2017, resumed operations in a controlled, phased and highly monitored approach with extensive input from participating government agencies. The Company has since implemented substantial operational, process and notification improvements at Midwest. The Company has been presented with cost reimbursements, loss of use and penalty requests from the involved governmental agencies. In January of 2018, The Surfrider Foundation and the City of Chicago initiated suits in the Northern District of Indiana alleging CWA and Permit violations at Midwest. On April 2, 2018, the U.S. EPA and the State of Indiana initiated a separate action against the Company and lodged a Consent Decree negotiated between U. S. Steel and the relevant governmental agencies consisting of all material terms to resolve the CWA and NPDES violations at the Midwest Plant. A public comment period for the Consent Decree ensued. U. S. Steel, U.S. EPA and the State of Indiana continue the process of reviewing and addressing those comments. The suits that the Surfrider Foundation and the City of Chicago filed are currently stayed. The Surfrider Foundation and the City of Chicago also filed motions, which were granted, to intervene in the Consent Decree case. The citizens groups filed their Complaints-in-Intervention on December 27, 2018, and filed Amended Complaints-in-Intervention on January 17, 2019. U. S. Steel continues to work with United States Department of Justice, U.S. EPA, and Indiana Department of Environmental Management towards a finalized Consent Decree.

Under the ~~Emission~~Emissions Trading Scheme (ETS), USSK's final allocation of allowances for the Phase III period, which covers the years 2013 through 2020 is 48 million allowances. ~~We estimate a shortfall of approximately 15 million allowances for the Phase III period.~~ Based on projected ~~future~~total production levels, we started to purchase allowances in the third quarter of 2017 to meet the annual compliance submission in the future. As of March 31, ~~2019,~~2020, we have purchased approximately 1212.2 million European Union Allowances (EUA) totaling ~~€128~~€141.1 million (approximately ~~$144~~$154.6 million)~~. However, due~~ to ~~a number~~cover the estimated shortfall of ~~variables such as~~emission allowances. We estimate that the ~~future market value of~~total shortfall will be approximately 12.5 million allowances ~~future production levels and future emissions intensity levels, we cannot reliably estimate~~for the Phase III period. The full cost of complying with the ETS regulations ~~at this time.~~will depend on future production levels and future emissions intensity levels.

The EU’s ~~Industry Emission~~Industrial Emissions Directive requires implementation of EU determined best available techniques (BAT) for ~~iron~~Iron and ~~steel~~Steel production, to reduce environmental impacts as well as compliance with BAT associated emission levels. Our most recent broad estimate of ~~future~~total capital expenditures for projects ~~that~~to comply with or go beyond BAT requirements is ~~up to~~ €138 million (approximately ~~$155~~$151 million) over the ~~2017 to 2020~~actual program period. These costs may be mitigated if USSK complies with certain financial covenants, which are assessed annually. USSK complied with these covenants as of ~~December~~March 31, ~~2018.~~2020. If we are unable to meet these covenants in the future, USSK might be required to provide additional collateral (e.g. bank guarantee) to secure the full value of estimated expenditures. There could be increased

operating costs associated with these projects, such as increased energy and maintenance costs. We are currently unable to reliably estimate what the increase in operating costs will be as many projects are ~~still~~ in the development stage.

For further discussion of laws applicable in Slovakia and the EU and their impact on USSK, see Note 22 to the Condensed Consolidated Financial Statements, “Contingencies and Commitments - Environmental Matters, EU Environmental Requirements.”

Future compliance with CO₂ emission requirements may include substantial costs for emission allowances, restriction of production and higher prices for coking coal, natural gas and electricity generated by ~~carbon based~~carbon-based systems. Because we cannot predict what requirements ultimately will be imposed in the U.S. and Europe, it is difficult to estimate the likely impact on U. S. Steel, but it could be substantial. On March 28, 2017, President Trump signed Executive Order 13783 instructing the ~~U.S. EPA~~United States Environmental Protection Agency (U.S. EPA) to review the Clean Power Plan. On October 16, 2017, the U.S. EPA proposed to repeal the Clean Power Plan after reviewing the plan pursuant to President Trump’s executive order. Any repeal and/or replacement of the Clean Power Plan is likely to be challenged by various proponents of the plan, such as environmental groups and certain states. Any impacts to our operations as a result of any future greenhouse gas regulations are not estimable at this time since the matter is unsettled. In any case, to the extent expenditures associated with any greenhouse gas regulation, as with all costs, are not ultimately reflected in the prices of U. S. Steel's products and services, operating results will be reduced.

There have been no material changes in U. S. Steel’s exposure to European Greenhouse Gas Emissions regulations since December 31, ~~2018.~~2019.

The CAA imposes stringent limits on air emissions with a federally mandated operating permit program and civil and criminal enforcement sanctions. The CAA requires, among other things, the regulation of hazardous air pollutants through the development and promulgation of National Emission Standards for Hazardous Air Pollutants (NESHAP) and Maximum Achievable Control Technology (MACT) Standards. The U.S. EPA has developed various industry-specific MACT standards pursuant to this requirement. The CAA requires the U.S. EPA to promulgate regulations establishing emission standards for each category of Hazardous Air Pollutants. The U.S. EPA also must conduct risk assessments on each source category that is already subject to MACT standards and determine if additional standards are needed to reduce residual risks.

While our operations are subject to several different categories of NESHAP and MACT standards, the principal impact of these standards on U. S. Steel operations includes those that are specific to coke making, iron making, steel making and iron ore processing.

The U.S. EPA is currently in the process of completing a Residual Risk and Technology Review of the Integrated Iron and Steel MACT regulations, Coke MACT regulations, and Taconite Iron Ore Processing MACT regulations as required by the CAA. The U.S. EPA is under a court order to complete the Residual Risk and Technology Review of the Integrated Iron and Steel regulations no later than ~~March 13,~~May 5, 2020; and to complete the Residual Risk and Technology Review of the Taconite Iron Ore Processing Regulations by June 30, 2020.

On August 16, 2019, U.S. EPA published a proposed Residual Risk and Technology Review (RTR) rule for the Integrated Iron and Steel MACT category in the Federal Register. Based on the results of U.S. EPA’s risk review, the Agency proposed that risks due to emissions of air toxics from the Integrated Iron and Steel category are acceptable and that the current regulations provided an ample margin of safety to protect public health. Under the technology review, U.S. EPA proposed that there are no developments in practices, processes or control technologies that necessitate revision of the standards. U.S. EPA accepted comments on the proposed rule until November 7, 2019. Based upon our analysis of the integrated iron and steel proposed rule, the Company does not expect any material impact if the rule is finalized as proposed. For the Taconite Iron Ore Processing category, based on the results of the Agency’s risk review, U.S. EPA is proposing that risks from emissions of air toxics from this source category are acceptable and that the existing standards provide an ample margin of safety. Furthermore, under the technology review, the Agency identified no cost-effective developments in controls, practices, or processes to achieve further emissions reductions. Therefore, U.S. EPA is proposing no revisions to the existing standards based on the RTRs. U.S. EPA accepted comments on the taconite proposed rule until October 25, 2019. Based upon our analysis of the proposed taconite rule, the Company does not expect any material impact if the rule is finalized as proposed. Because the U.S. EPA has not completed its review of the Coke MACT regulations, any impacts related to the U.S. EPA’s review of ~~these~~the coke standards cannot be estimated at this time.

On March 12, 2018, the New York State Department of Environmental Conservation (DEC), along with other petitioners, submitted a CAA Section ~~126~~126(b) petition to the U.S. EPA. In the petition, the DEC asserts that stationary sources from the following nine states are interfering with attainment or maintenance of the 2008 and 2015 ozone National Ambient Air Quality Standards (NAAQS) in New York: Illinois, Indiana, Kentucky, Maryland, Michigan, Ohio, Pennsylvania, Virginia, and West Virginia. DEC is requesting the U.S. EPA to require sources of nitrogen oxides in the nine states to reduce such emissions. In a final rule promulgated in the October 18, 2019, Federal Register, EPA denied the petition. On ~~May 4, 2018, citing Section 307(d)(10)~~October 29, 2019, New York, New Jersey, and the City of New York petitioned the United States Court of Appeals for the District of Columbia Circuit for review of U. S. EPA’s denial of the ~~CAA,~~petition. The matter remains before the ~~U.S. EPA issued a notice extending the deadline for the agency to respond to the petition until November 9, 2018. However, to date, U.S. EPA has not responded to the petition.~~Court.

The CAA also requires the U.S. EPA to develop and implement NAAQS for criteria pollutants, which include, among others, particulate matter (PM) - consisting of PM₁₀ and PM_2.5, lead, carbon monoxide, nitrogen dioxide, SOsulfur dioxide (SO₂), and ozone.

In June 2010, the U.S. EPA significantly lowered the primary NAAQS for SO₂ from 140 parts per billion (ppb) on a 24-hour basis to an hourly standard of 75 ppb. Subsequently, ~~the~~ U.S. EPA designated the areas in which Great Lakes Works and Mon Valley Works facilities are located as nonattainment with the 2010 standard for the SO₂ NAAQS. The non-attainment designation requires the region to implement operational and/or capital improvements to demonstrate attainment with the 2010 standard. U. S. Steel worked with the Allegheny County Health Department (ACHD) in developing a State Implementation Plan (SIP) for the Allegheny County portion of the Pennsylvania SIP that includes reductions of SO₂ and improved dispersion from U. S. Steel sources. On November 19, 2018, U.S. EPA published a proposed rule to approve the SIP. ~~Comments~~Pursuant to a consent decree in Center for Biological Diversity, et al., v. Wheeler,

No. 4:18-cv-03544 (N.D. Cal.), EPA has agreed to take final action on the ~~proposed rule were accepted until December 19, 2018.~~SIP submittal no later than April 30, 2020. In addition, as noted in the Legal Proceedings section, U. S. Steel continues to work with the regulatory authorities to address the Wayne County, Michigan (where Great Lakes Works is located) nonattainment status. The operational and financial impacts of the SO₂ NAAQS are not estimated to be material at this time.

In October 2015, the U.S. EPA lowered the NAAQS for ozone from 75 ppb to 70 ppb. On November 6, 2017, the U.S. EPA designated most areas in which we operate as attainment with the 2015 standard. In a separate ruling, on June 4, 2018, the U.S. EPA designated other areas in which we operate as “marginal nonattainment” with the 2015 ozone standard. ~~While on~~On December 6, 2018, U.S. EPA published a final rule regarding implementation of the 2015 ozone standard. Because no state regulatory or permitting actions to bring the ozone nonattainment areas into attainment have yet to be proposed or developed for U. S. Steel facilities, the operational and financial impact of the ozone NAAQS cannot be reasonably estimated at this time.

On December 14, 2012, the U.S. EPA lowered the annual standard for PM_2.5 from 15 micrograms per cubic meter (ug/m3) to 12 ug/m3, and retained the PM_2.5 24-hour and PM₁₀ NAAQS rules. In December 2014, the U.S. EPA designated some areas in which U. S. Steel operates as nonattainment with the 2012 annual PM_2.5 standard. On April 6, 2018, the U.S. EPA published a notice that Pennsylvania, California and Idaho failed to submit a SIP to demonstrate attainment with the 2012 fine particulate standard by the deadline established by the CAA. As a result of the notice, Pennsylvania, a state in which we operate, iswas required to submit a SIP to the U.S. EPA no later than November 7, 2019 to avoid sanctions. ~~Because it is early~~On April 29, 2019, the ACHD published a draft SIP for the Allegheny County nonattainment area which demonstrates that all of Allegheny County will meet its reasonable further progress requirements and be in attainment with the 2012 PM_2.5 annual and 24-hour NAAQS by December 31, 2021 with the existing controls that are in place. On September 12, 2019, the Allegheny County Board of Health unanimously approved the draft SIP. The draft SIP was then sent to the Pennsylvania Department of Environmental Protection (PADEP). PADEP submitted the SIP ~~development stages, any impacts~~ to ~~U. S. Steel cannot be reasonably estimated at this time.~~

~~In 2010, the~~ U.S. EPA ~~retained the annual nitrogen dioxide NAAQS standard, but created a new 1-hour NAAQS and established new data reduction and monitoring requirements. While the~~for approval on November 1, 2019. To date, U.S. EPA has ~~classified all areas as being in attainment or unclassifiable, it is requiring implementation of a network of monitoring stations~~not taken action on PADEP’s submittal. On April 14, 2020, EPA proposed to ~~assess air quality. Until~~retain the ~~network is implemented~~12 ug/m3 annual and ~~further designations are made, the impact on operations at U. S. Steel facilities cannot be reasonably estimated.~~35 ug/3 24-hour PM_2.5 standards without revision.

In July 2018, the ACHD provided U. S. Steel, ACHD Regulation Subcommittee members and interested parties with draft regulations that would modify the existing air regulations applicable to coke plants in Allegheny County. While ACHD currently has some of the most stringent air regulations in the country governing coke plants, which apply to U. S. Steel’s coke plant in Clairton, Pennsylvania (the only remaining coke plant in Allegheny County and one of two remaining in Pennsylvania), the draft regulations would reduce the current allowable emissions from coke plant operations and would be more stringent than the Federal Best Available Control Technology and Lowest Achievable Emission Rate requirements. In various meetings with ACHD, U. S. Steel has raised significant objections, in particular, that ACHD has not demonstrated that continuous compliance with the draft rule is economically and technologically feasible. While U. S. Steel continues to meet with ACHD regarding the draft rule, U. S. Steel believes that any rule promulgated by ACHD must comply with ~~their~~its statutory authority. If the draft rule or similar rule is adopted, the financial and operational impacts to U. S. Steel could be material. To assist in developing rules objectively and with adequate technical justification, the June 27, 2019, Settlement Agreement, establishes procedures that would be used when developing a new rule. For further details on the June 27, 2019 Settlement Agreement with ACHD see "Item 1. Legal Proceedings - Environmental Proceedings - Mon Valley Works."

In the United States, U. S. Steel has been identified as a potentially responsible party (PRP) at ~~nine~~six sites under CERCLA as of March 31, ~~2019.~~2020. Of these, there are ~~four~~three sites ~~where~~for which information requests have been received or there are other indications that U. S. Steel may be a PRP under CERCLA, but ~~where~~ sufficient information is not presently available to confirm the existence of liability or to make a reasonable estimate with respect to any potential liabilities. There are also 17 additional sites ~~where~~for which U. S. Steel may be liable for remediation costs in excess of $100,000 under other environmental statutes, both federal and state, or where private parties are seeking to impose liability on U. S. Steel

for remediation costs through discussions or litigation. At many of these sites, U. S. Steel is one of a number of parties involved and the total cost of remediation, as well as U. S. Steel’s share, is frequently dependent upon the outcome of ongoing investigations and remedial studies. U. S. Steel accrues for environmental remediation activities when the responsibility to remediate is probable and the amount of associated costs is reasonably estimable. As environmental remediation matters proceed toward ultimate resolution or as remediation obligations arise, charges in excess of those previously accrued may be required.

For further discussion of relevant environmental matters, see "Item 1. Legal Proceedings - Environmental Proceedings."

INTERNATIONAL TRADE

U. S. Steel continues to face import competition, much of which is ~~unfairly-traded,~~unfairly traded, supported by foreign governments, and fueled by massive global steel ~~overcapacity. Such~~ overcapacity, currently estimated to be over 440 million metric tons per year. These imports, as well as the underlying policies/practices ~~policies~~ and overcapacity, impact the ~~Company's~~Company’s operational and financial performance. U. S. Steel continues to lead ~~the industry in~~ efforts to address these challenges that threaten the Company, our workers, our stockholders, and our country’s national and economic security.

~~Through~~As of the date of this filing, pursuant to a series of Presidential Proclamations ~~pursuant to~~issued in accordance with Section 232 of the Trade Expansion Act of 1962, ~~as of the date of this filing,~~ U.S. imports of certain steel products are subject to a 25 percent tariff, except for imports from: (1) ~~Turkey, which are subject to a 50 percent tariff; (2)~~ Argentina, Brazil, and South Korea, which are subject to restrictive quotas; (2) Canada and Mexico, which are not subject to either tariffs or quotas but tariffs could be re-imposed on surging product groups after consultations; and (3) Australia, which is not subject to ~~either~~ tariffs, quotas, or ~~quotas. Since its implementation in March 2018,~~an anti-surge mechanism. A January 24, 2020, Presidential Proclamation expanded the Section 232 ~~action has supported the U.S.~~tariffs to cover imports of certain downstream steel ~~industry's and U. S. Steel’s multiple restarts and investment initiatives. The Company continues~~products from countries subject to ~~actively defend~~ the Section 232 ~~action through all available tools and strategies, including by highlighting these benefits and the importance of maintaining the Section 232 action.~~tariffs, effective February 8, 2020.

The U.S. Department of Commerce (DOC) is managing a process in which U.S. companies may request and/or oppose temporary product exclusions from the Section 232 tariffs or quotas. Over ~~55,000~~133,000 exclusions have been requested for steel products. U. S. Steel ~~is opposing~~opposes exclusion requests for products that are the same as, or substitute products for, those produced by U. S. ~~Steel produces.~~Steel.

Several legal challenges and retaliatory trade measures have been initiated in response to the Section 232 action. In the United States, the U.S. Court of International Trade (CIT) is considering Transpacific Steel v. United States, filed in January 2019, in which U.S. importers of Turkish steel and Turkish steel producers challenge the increased Section 232 tariffs on imports from Turkey. In March 2019, the CIT upheld the constitutionality of the Section 232 statute in a challenge by the American Institute for International Steel, which has appealed toFebruary 2020, the U.S. Court of Appeals for the Federal Circuit (CAFC) ~~and, in addition,~~upheld the constitutionality of the Section 232 statute. The American Institute for International Steel has ~~petitioned for~~appealed the ~~case~~CAFC’s decision to ~~be heard by~~ the Supreme Court, ofwhich will decide whether to hear the ~~United States~~appeal by October 2020. There are currently twenty Section 232 challenges before the ~~CAFC enters judgment.~~U.S. Court of International Trade (CIT). Multiple countries have challenged the Section 232 action at the World Trade Organization (WTO), imposed retaliatory tariffs, and/or acted to safeguard their domestic steel industries from increased steel imports. In turn, the United States has challenged the retaliation at the WTO. ~~Decisions~~

Since its implementation in March 2018, the Section 232 action has supported the U.S. steel industry's and U. S. Steel’s investments in advanced steel capacity, technology, and skills, thereby strengthening U.S. national and economic security. The Company continues to actively defend the Section 232 action through all available tools and strategies, including by highlighting these ~~WTO disputes are not expected until~~benefits and the ~~fourth quarter~~importance of ~~2019 at~~maintaining the ~~earliest.~~Section 232 action.

In February 2019, the European Commission (EC) imposed a definitive tariff rate quota ~~(TRQ)~~ safeguard on certain steel imports: 25 percent tariffs on certain steel imports that exceed quotas ~~based on 105 percent of average import volumes for 2015-2017 and increasing 5 percent annually,~~ effective ~~February 2019~~ through June 2021. In February 2020, the EC initiated a second review of the steel safeguard to consider whether any adjustments should be made.

Antidumping (AD) and countervailing (CVD or antisubsidy) duties apply in addition to the Section 232 tariffs and quotas and the EC’s ~~TRQ~~ safeguard, and AD/CVD orders will last beyond the Section 232 action and EC’s ~~TRQ~~ safeguard. Thus, U. S. Steel continues to actively defend and maintain the 54 U.S. AD/CVD orders and 11 EU AD/CVD orders covering products U. S. Steel produces in multiple proceedings before the DOC, U.S. International Trade Commission (ITC), CIT, CAFC, the EC and European courts, and the WTO.

InFollowing the 2018 ~~following an~~ investigation ~~of China’s technology transfer and intellectual property violations by the U.S. Trade Representative (USTR)~~ under Section 301 of the Trade Act of 1974, the United States ~~imposed 10 and~~began imposing 15 to 25 percent tariffs on ~~approximately $250 billion of U.S.~~certain imports from China, including ~~finished~~certain steel ~~couplings, some products used in steel production and certain downstream~~ products. ~~As of~~Following the ~~date of this filing,~~U.S.-China “Phase One” Trade Agreement, effective February 14, 2020, the ~~United States has postponed increasing the 10~~15 percent tariffs were reduced to 7.5 percent but the 25 percent tariffs ~~as negotiations with China on structural trade issues, including China's subsidies and government support~~remain in place pending the negotiation of ~~its steel industry, progress.~~a Phase Two agreement.

The ~~G-20’s~~ Global Forum on Steel Excess Capacity, ~~continues to work to reduce global steel overcapacity, currently estimated at 425 million tons. The~~the Organization for Economic Co-operation and Development Steel Committee and trilateral negotiations between the United States, EU, and Japan ~~also~~ continue to address global ~~steel~~ overcapacity.

U. S. Steel will continue to execute a broad, global strategy to maximize opportunities and navigate challenges presented by imports, global steel overcapacity, and international trade law and policy developments.

NEW ACCOUNTING STANDARDS

See Notes 2 and 3 to the Condensed Consolidated Financial Statements in Part I Item 1 of this Form 10-Q.



Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~There were no material changes in~~ U. S. ~~Steel's exposure~~Steel is exposed to certain risks related to its ongoing business operations, including financial, market, ~~risk~~political, and economic risks. The global pandemic resulting from ~~December~~the novel coronavirus designated as COVID-19 has had a significant impact on our business and the global economy. The economic uncertainty has increased volatility in the financial markets and could adversely affect our liquidity and ability to access the capital markets. In response to the decline in demand for our products resulting from the COVID-19 outbreak, we borrowed an additional $800 million under the Fifth Credit Facility Agreement during the three month period ended March 31, ~~2018.~~2020. As of March 31, 2020, the Company had approximately $2.1 billion in outstanding variable interest debt. An increase in the variable interest rate increases our interest expense and interest paid. A quarter percent increase in the variable interest rate on the amount of variable interest rate indebtedness as of March 31, 2020 would increase annual interest expense by approximately $5 million. See Note 16 in the Notes to the Condensed Consolidated Financial Statements for further details. In the future, we may enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility.



Item 4.	CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

U. S. Steel has evaluated the effectiveness of the design and operation of its disclosure controls and procedures as of March 31, ~~2019~~2020. These disclosure controls and procedures are the controls and other procedures that were designed to ensure that information required to be disclosed in reports that are filed with or submitted to the U.S. Securities and Exchange Commission are: (1) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures and (2) recorded, processed, summarized and reported within the time periods specified in applicable law and regulations. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, ~~2019~~2020, U. S. Steel’s disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There have not been any changes in U. S. Steel’s internal control over financial reporting that occurred during the fiscal quarter covered by this quarterly report, which have materially affected, or are reasonably likely to materially affect, U. S. Steel’s internal control over financial reporting.

~~UNITED STATES STEEL CORPORATION~~

~~SUPPLEMENTAL STATISTICS (Unaudited)~~

Three Months Ended
March 31,
(Dollars in millions) 2019 2018
SEGMENT EARNINGS (LOSS) BEFORE INTEREST AND INCOME TAXES:

Flat-Rolled $ 95
$ 33
U. S. Steel Europe 29
110
Tubular 10
(27 )
     Total reportable segments 134
116
Other Businesses 8
11
Items not allocated to segments:

Clairton coke making facility fire (31 ) —
Granite City Works adjustment to temporary idling charges —
10
Total earnings before interest and income taxes $ 111
$ 137
CAPITAL EXPENDITURES

Flat-Rolled $ 247
$ 176
U. S. Steel Europe 34
21
Tubular 19
11
Other Businesses 2
—
     Total $ 302
$ 208
OPERATING STATISTICS

Average realized price: ($/net ton unless otherwise noted) ^(a)

     Flat-Rolled $ 798
$ 740
     U. S. Steel Europe 670
707
     U. S. Steel Europe (€/net ton) 590
575
     Tubular 1,549
1,387
Steel Shipments:^(a)(b)

     Flat-Rolled 2,725
2,534
     U. S. Steel Europe 1,064
1,127
     Tubular 207
179
Intersegment Shipments:^(b)

     Flat-Rolled to Tubular 81
67
Raw Steel Production:^(b)

     Flat-Rolled 3,075
2,784
     U. S. Steel Europe 1,159
1,292
Raw Steel Capability Utilization: ^(c)

     Flat-Rolled 73 % 66 %
     U. S. Steel Europe 94 % 105 %

^(a)~~Excludes intersegment transfers.~~

^(b)~~Thousands of net tons.~~

^(c)~~Based on annual raw steel production capability of 17.0 million net tons for Flat-Rolled and 5.0 million net tons for USSE.~~

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

GENERAL LITIGATION

On April 11, 2017, there was a process ~~waste water~~waste-water release at our Midwest Plant (Midwest) in Portage, Indiana, that impacted a water outfall that discharges to Burns Waterway near Lake Michigan. U. S. Steel identified the source of the release and made the necessary repairs. We determined that all repairs were safely working as intended and, on April 14, 2017, resumed operations in a controlled, phased and highly monitored approach with extensive input from participating government agencies. The Company has since implemented substantial operational, process and notification improvements at Midwest. The Company has been presented with cost reimbursements, loss of use and penalty requests from the involved governmental agencies. In January of 2018, The Surfrider Foundation and the City of Chicago initiated suits in the Northern District of Indiana alleging ~~CWA~~Clean Water Act (CWA) and Permit violations at Midwest. On April 2, 2018, the U.S. EPA and the State of Indiana initiated a separate action against the Company and lodged a Consent Decree negotiated between U. S. Steel and the relevant governmental agencies consisting of all material terms to resolve the CWA and ~~NPDES~~National Pollutant Discharge Elimination System violations at the Midwest Plant. A public comment period for the Consent Decree ensued. ~~U. S. Steel, U.S. EPA and the State of Indiana continue the process of reviewing and addressing those comments.~~ The suits that the Surfrider Foundation and the City of Chicago filed are currently stayed. The Surfrider Foundation and the City of Chicago also filed motions, which were granted, to intervene in the Consent Decree case. The ~~citizens groups filed their Complaints-in-Intervention on December 27, 2018 and filed Amended Complaints-in-Intervention on January 17, 2019. U. S. Steel continues to work with~~ United States Department of Justice ~~U.S. EPA,~~(DOJ) filed a revised Consent Decree and ~~Indiana Department~~a motion with the Court to enter the Consent Decree as final on November 20, 2019. Surfrider Foundation, City of ~~Environmental Management towards a finalized~~Chicago and other non-governmental organizations filed objections to the revised Consent Decree. The DOJ and U. S. Steel made filings in support of the revised Consent Decree.

On November 30, 2018, the Minnesota Pollution Control Agency (MPCA) issued a new Water Discharge Permit for the Minntac Tailings Basin waters. The Permit contains new sulfate limitations applicable to water in the Tailings Basin and groundwater flowing from U. S. Steel’s property. The MPCA also acted on the same date, denying the Company’s requests for variances from ground and surface water standards and request for a contested case hearing. U. S. Steel filed appeals ~~on December 19, 2018~~with the Minnesota Court of Appeals challenging the actions taken by the MPCA. Separate appeals ~~have been~~were filed by a Minnesota Native American Tribe (Fond du Lac Band) and a nonprofit environmental group (Water Legacy). All cases were consolidated. On December 9, 2019, the court issued a favorable ruling to U. S. Steel, ~~has~~removing the sulfate limitations for the Tailings Basin and groundwater. The opposing parties filed ~~Petitions~~appeals with the Minnesota Supreme Court on January 8, 2020 which were accepted by that Court. The appeals are currently on hold awaiting a separate related decision of the U. S. Supreme Court case which could impact the Court of Appeals decision. The litigation is expected to ~~Intervene~~resume in ~~both cases.~~the summer of 2020.

On October 2, 2017, an Amended Shareholder Class Action Complaint was filed in Federal Court in the Western District of Pennsylvania consolidating previously-filed actions. Separately, ~~four~~five related shareholder derivative lawsuits were filed in State and Federal courts in Pittsburgh, ~~Pennsylvania.~~Pennsylvania and the Delaware Court of Chancery. The underlying consolidated class action lawsuit alleges that U. S. Steel, certain current and former officers, an upper level manager of the Company and the financial underwriters who participated in the August 2016 secondary public offering of the Company's common stock (collectively, Defendants) violated federal securities laws in making false statements and/or failing to discover and disclose material information regarding the financial condition of the Company. The lawsuit claims that this conduct caused a prospective class of plaintiffs to sustain damages during the period from January 27, 2016 to April 25, 2017 as a result of the prospective class purchasing the Company's common stock at artificially inflated prices and/or suffering losses when the price of the common stock dropped. The derivative lawsuits generally make the same allegations against the same officers and also allege that certain current and former members of the Board of Directors failed to exercise appropriate control and oversight over the Company and were unjustly compensated. The plaintiffs seek to recover losses that were allegedly sustained. The class action Defendants moved to dismiss plaintiffs’ claims. On September 29, 2018 the Court ruled on those motions granting them in part and denying them in part. On March 18, 2019, the plaintiffs withdrew the claims against the Defendants related to the 2016 secondary offering. ~~Therefore,~~As a result, the underwriters are no longer parties to the case. The Company and the individual defendants are vigorously defending the remaining claims. On December 31, 2019, the Court granted Plaintiffs’ motion to certify the proceeding as a class action. The Company's appeal of that decision has been denied by the Third Circuit Court of Appeals. Discovery is proceeding.

ENVIRONMENTAL PROCEEDINGS

The following is a summary of the proceedings of U. S. Steel that were pending or contemplated as of March 31, ~~2019,~~2020, under federal and state environmental laws. Information about specific sites where U. S. Steel is or has been engaged in significant clean up or remediation activities is also summarized below. Except as described herein, it is not possible to accurately predict the ultimate outcome of these matters.

CERCLA Remediation Sites

Claims under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) have been raised with respect to the cleanup of various waste disposal and other sites. Under CERCLA, potentially responsible parties (PRPs) for a site include current owners and operators, past owners and operators at the time of disposal, persons who arranged for disposal of a hazardous substance at a site, and persons who transported a hazardous substance to a site. CERCLA imposes strict and joint and several liabilities. Because of various factors, including the ambiguity of the regulations, the difficulty of identifying the responsible parties for any particular site, the complexity of determining the relative liability among them, the uncertainty as to the most desirable remediation techniques, and the amount of damages and cleanup costs and the time period during which such costs may be incurred, we are unable to reasonably estimate U. S. Steel’s ultimate liabilities under CERCLA.

As of March 31, ~~2019,~~2020, U. S. Steel has received information requests or been identified as a PRP at a total of ~~nine~~six CERCLA sites, ~~four~~three of which have liabilities that have not been resolved. Based on currently available information, which is in many cases preliminary and incomplete, management believes that U. S. Steel’s liability for CERCLA cleanup and remediation costs at the other ~~five~~three sites will be between $100,000 and $1 million for ~~four~~two of the sites, and over $5 million for one site as described below.

Duluth Works

The former U. S. Steel Duluth Works site was placed on the National Priorities List under CERCLA in 1983 and on the State of Minnesota’s Superfund list in 1984. Liability for environmental remediation at the site is governed by a Response Order by Consent executed with the MPCA in 1985 and a Record of Decision signed by MPCA in 1989. U. S. Steel has partnered with the Great Lakes National Program Office (GLNPO) of U.S. EPA Region 5 to address contaminated sediments in the St. Louis River Estuary and several other Operable Units that could impact the Estuary if not addressed. An amendment to the Project Agreement between U. S. Steel and GLNPO was executed during the second quarter of 2018 to recognize the costs associated with implementing the proposed remedial plan at the site.

While work continues on ~~completion of~~requesting proposals for implementing the remedial design, permitting and educating the public and key stakeholders on the details of the plan, there has been no material change in the status of the project during the three months ended March 31, ~~2019.~~2020. Additional study, investigation, design, oversight costs, and implementation of U. S. Steel's preferred remedial alternatives on the upland property and Estuary are currently estimated as of March 31, ~~2019~~2020 at approximately ~~$46~~$44 million.

~~RCRA~~Resource Conservation Recovery Act (RCRA) and Other Remediation Sites

U. S. Steel may be liable for remediation costs under other environmental statutes, both federal and state, or where private parties are seeking to impose liability on U. S. Steel for remediation costs through discussions or litigation. There are 17 such sites where remediation is being sought involving amounts in excess of $100,000. Based on currently available information, which is in many cases preliminary and incomplete, management believes that liability for cleanup and remediation costs in connection with seven sites have potential costs between $100,000 and $1 million per site, five sites may involve remediation costs between $1 million and $5 million per site and five sites are estimated to or could have, costs for remediation, investigation, restoration or compensation in excess of $5 million per site.

For more information on the status of remediation activities at U. S. Steel’s significant sites, see the discussions related to each site below.

Gary Works

On October 23, 1998, the U.S. EPA issued a final Administrative Order on Consent (Order) addressing Corrective Action for Solid Waste Management Units (SWMU) throughout Gary Works. This Order requires U. S. Steel to perform a ~~Resource Conservation and Recovery Act (RCRA)~~RCRA Facility Investigation (RFI), a Corrective Measures Study (CMS) and Corrective Measure Implementation. ~~While work continues~~

Evaluations are underway at six groundwater areas on ~~several items, there has been no material change in~~ the ~~status~~east side of the ~~project during~~facility and it is likely that corrective measures will be required, but it is not possible at this time to define a scope or estimate costs for what may be required by the ~~three months ended March 31, 2019.~~U.S. EPA. Until the remaining Phase I work and Phase II field investigations are completed, it is not possible to assess what additional expenditures will be necessary for Corrective Action projects at Gary Works. In total, the accrued liability for Corrective Action projects is approximately ~~$25~~$24 million as of March 31, ~~2019,~~2020, based on our current estimate of known remaining costs. Significant additional costs associated with the six groundwater areas at this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Geneva Works

At U. S. Steel’s former Geneva Works, liability for environmental remediation, including the closure of three hazardous waste impoundments and facility-wide corrective action, has been allocated between U. S. Steel and the current property owner pursuant to an agreement and a permit issued by the Utah Department of Environmental Quality (UDEQ). Having completed the investigation on a majority of the remaining areas identified in the permit, U. S. Steel has determined the most effective means to address the remaining impacted material is to manage those materials in a previously approved on-site Corrective Action Management Unit (CAMU). U. S. Steel awarded a contract for the implementation of the CAMU project during the fourth quarter of ~~2018 and submitted the first of several design documents to UDEQ for approval.~~2018. Construction, waste stabilization and placement along with closure of the CAMU are ~~expected~~scheduled to be complete in 2020. U. S. Steel has an accrued liability of approximately ~~$60~~$41 million as of March 31, ~~2019,~~2020, for our estimated share of the remaining costs of remediation.

USS-POSCO Industries (UPI)

AIn February 2020, U. S. Steel purchased the remaining 50 percent interest in UPI, a former joint venture that is located in Pittsburg, California between subsidiaries of U. S. Steel and ~~POSCO,~~POSCO. Prior to formation of the joint venture, UPI's facilities were previously owned and operated solely by U. S. Steel which ~~retains primary~~assumed responsibility for the existing environmental conditions. U. S. Steel continues to monitor the impacts of the remedial plan implemented in 2016 to address groundwater impacts from trichloroethylene at SWMU 4. Evaluations continue for the ~~three~~ SWMUs known as the Northern Boundary Group and it is likely that corrective measures will be required, but it is not possible at this time to define a scope or estimate costs for what may be required by the California Department of Toxic Substances Control. As such, there has been no material change in the status of the project during the three months ended March 31, ~~2019.~~2020. As of March 31, ~~2019,~~2020, approximately ~~$1 million~~$942,000 has been accrued for ongoing environmental studies, investigations and remedy monitoring. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.” See Note 5 to the Condensed Consolidated Financial Statements "Acquisition" for further details regarding U. S. Steel's purchase of UPI.

Fairfield Works

A consent decree was signed by U. S. Steel, the ~~U.S.~~U.S EPA and the U.S. Department of Justice and filed with the United States District Court for the Northern District of Alabama (United States of America v. USX Corporation) in December 1997. In accordance with the consent decree, U. S. Steel initiated a RCRA corrective action program at the Fairfield Works facility. The Alabama Department of Environmental Management, with the approval of the ~~U.S.~~U.S EPA, assumed primary responsibility for regulation and oversight of the RCRA corrective action program at Fairfield Works. While work continues on different aspects of the program, there has been no material change in the status of the project during the three months ended March 31, ~~2019.~~2020. In total, the accrued liability for remaining work under the Corrective Action Program, was approximately ~~$50,000~~$174,000 at March 31, ~~2019.~~2020. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Fairless Plant

In April 1993, U. S. Steel entered into a consent order with the ~~U.S.~~U.S EPA pursuant to RCRA, under which U. S. Steel would perform Interim Measures (IM), an RFI and CMS at our Fairless Plant. A Phase I RFI Final Report was submitted in September of 1997. With ~~U.S.~~U.S EPA’s agreement, in lieu of conducting subsequent phases of the RFI and the CMS, U. S. Steel has been working through the Pennsylvania Department of Environmental Protection Act 2 Program to characterize and remediate facility parcels for redevelopment. While work continues on these items, there has been

no material change in the status of the project during the three months ended March 31, ~~2019.~~2020. As of March 31, ~~2019,~~2020, the accrued liability to maintain the interim measures, and clear properties through the Act 2 process is approximately ~~$245,000.~~$213,000. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Lorain Tubular Operations

In September 2006, U. S. Steel and the Ohio Environmental Protection Agency (OEPA) commenced discussions about RCRA Corrective Action at Lorain Tubular Operations. A Phase I RFI on the identified SWMUs and Areas of Contamination was submitted in March 2012. While discussions continue with OEPA on drafting the Statement of Basis identifying potential remedies to address areas documented in the Phase II RFI, there has been no material change in the status of the project during the three months ended March 31, ~~2019.~~2020. As of March 31, ~~2019,~~2020, costs to complete additional projects are estimated to be approximately ~~$88,000.~~$79,000. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Joliet Works

The 50-acre parcel at the former Joliet Works is enrolled in the Illinois Environmental Protection Agency’s (IEPA) voluntary Site Remediation Program (the Program). The Program requires investigation and establishment of cleanup objectives followed by submission/approval of a Remedial Action Plan to meet those objectives. The 50-acre parcel was divided into four subareas with remedial activities completed in 2015 for three of the subareas. While work continues to define the ~~requirements for further investigation~~extent of impacts at the remaining subarea, there has been no material change in the status of the project during the three months ended March 31, ~~2019.~~2020. U. S. Steel has an accrued liability of ~~$284,000 related to this matter~~$258,000 as of March 31, ~~2019.~~2020. Significant additional costs associated with this site are possible and are referenced in Note 22 to the Condensed Consolidated Financial Statements “Contingencies and Commitments - Environmental Matters - Remediation Projects - Projects with Ongoing Study and Scope Development.”

Cherryvale (KS) Zinc

In April 2003, U. S. Steel and Salomon Smith Barney Holdings, Inc. (SSB) entered into a Consent Order with the Kansas Department of Health & Environment (KDHE) concerning a former zinc smelting operation in Cherryvale, Kansas. Remediation of the site proper was essentially completed in 2007. The Consent Order was amended on May 3, 2013, to require investigation (but not remediation) of potential contamination beyond the boundary of the former zinc smelting operation. On November 22, 2016, KDHE approved a State Cooperative Final Agency Decision Statement that identified the remedy selected to address potential contamination beyond the boundary of the former zinc smelting site. The Removal Action Design Plan was approved during the second quarter of 2018. The Waste Deposition Area design and the Interim Risk Management Plan (which includes institutional controls) were approved by KDHE during the fourth quarter of 2018. ~~Negotiations of an~~An amended consent order for remediation ~~commenced~~was signed in ~~December 2018.~~May 2019 and a remediation contract was executed in June 2019.U. S. Steel has an accrued liability of approximately ~~$11~~$9 million as of March 31, ~~2019,~~2020, for our estimated share of the cost of remediation.

South Works

On August 29, 2017, U. S. Steel was notified by the U.S. Coast Guard of a sheen on the water in the North Vessel Slip at our former South Works in Chicago, Illinois. U. S. Steel has been working with the IEPA under their voluntary Site Remediation Program since 1993 to evaluate the condition of the property including the North Vessel Slip. The result of this cooperative effort has been the issuance of a series of “No Further Remediation” (NFR) notices to U. S. Steel including one specific to the North Vessel Slip. U. S. Steel has notified the IEPA of the potential changed condition and is working closely with the IEPA and the U. S. Coast Guard to determine the source of the sheen and options to address the issue. U. S. Steel has an accrued liability of ~~$22,000~~$97,000 as of March 31, ~~2019.~~2020.

Air Related Matters

~~Gary Works~~

In November 2018, the Indiana Department of Environmental Management (IDEM) advised U. S. Steel that it intends to address certain deviations from the Gary Works Title V Permit that were to have occurred in late 2017 and the first three quarters of 2018 in an enforcement action that it anticipates would be resolved through an Agreed Order. IDEM indicated that it intends to address the following issues in the action: intermittent exceedances of opacity standards at the steel producing roof monitor; deviations from certain miscellaneous inspection requirements; exceedance of the hydrochloric acid limit at the pickle line (which U. S. Steel has since demonstrated compliance); and exceedance of

the particulate matter limit at the iron pellet screeners. Generally, the deviations were self-disclosed by U. S. Steel in reports submitted to IDEM. U. S. Steel is currently working with IDEM to resolve the issues.

Great Lakes Works

In June 2010, the EPA significantly lowered the primary (NAAQS) for SO₂ from 140 ppb on a 24-hour basis to an hourly standard of 75 ppb. Based upon the 2009-2011 ambient air monitoring data, the U.S. EPA designated the area in which Great Lakes Works is located as nonattainment with the 2010 SO₂ NAAQS.

As a result, pursuant to the CAA, the Michigan Department of ~~Environmental Quality (MDEQ)~~Environment, Great Lakes and Energy (EGLE) was required to submit a SIP to the U.S. EPA that demonstrates that the entire nonattainment area (and not just the monitor) would be in attainment by October 2018 by using conservative air dispersion modeling. To develop the SIP, U. S. Steel met with ~~MDEQ~~EGLE on multiple occasions and had offered reduction plans to ~~MDEQ~~EGLE but the parties could not agree to a plan. ~~MDEQ,~~EGLE, instead promulgated Rule 430 which was solely directed at U. S. Steel. The Company challenged Rule 430 before the Michigan Court of Claims who by Order dated October 4, 2017, granted the Company’s motion for summary disposition voiding Rule 430 finding that it violated rule-making provisions of the Michigan Administrative Procedures Act and Michigan Constitution. Since Rule 430 has been invalidated and ~~MDEQ's~~EGLE's SIP has not been approved, U.S. EPA has indicated that it would promulgate a Federal Implementation Plan (FIP) pursuant to its obligations and authority under the ~~Clean Air Act (CAA).~~CAA. Because development of the FIP is in the early stages, the impacts of the nonattainment designation to the Company are not estimable at this time.

On January 17, 2019, U. S. Steel and ~~MDEQ~~EGLE met to discuss resolution of violations that were alleged to have occurred intermittently in 2017 and 2018 regarding opacity from: the D4 Blast Furnace slag pit, D4 Blast Furnace backdraft stack, B2 Blast Furnace casthouse roof monitor, B2 Blast Furnace backdraft stack, and Basic Oxygen Furnace Shop Roof Monitor; and exceedances of applicable limits at the pickle line. ~~Subsequent to the meeting in late February, the MDEQ~~More recently, EGLE advised U. S. Steel that it was assessing a civil penalty of ~~$378,883~~approximately $370,000 for these alleged violations. U. S. Steel and EGLE continue to negotiate resolution.

Granite City Works

In October 2015, Granite City Works received a Violation Notice from IEPA in which the IEPA alleges that U. S. Steel violated the emission limits for nitrogen oxides (NOx) and volatile organic compounds from the Basic Oxygen Furnace Electrostatic Precipitator Stack. In addition, the IEPA alleges that U. S. Steel exceeded its natural gas usage limit at its CoGeneration Boiler. U. S. Steel responded to the notice and is currently discussing resolution of the matter with IEPA.

Although discussions with IEPA regarding the foregoing alleged violations are ongoing and the resolution of these matters is uncertain at this time, it is not anticipated that the result of those discussions will be material to U. S. Steel.

Minnesota Ore Operations

On February 6, 2013, the U.S. EPA published a FIP that applies to taconite facilities in Minnesota. The FIP establishes and requires emission limits and the use of low NOx reduction technology on indurating furnaces as Best Available Retrofit Technology (BART). While U. S. Steel installed low NOx burners on three furnaces at Minntac and is currently obligated to install low NOx burners on the two other furnaces at Minntac pursuant to existing agreements and permits, the rule would require the installation of a low NOx burner on the one furnace at Keetac for which U. S. Steel did not have an otherwise existing obligation. U. S. Steel estimates expenditures associated with the installation of low NOx burners of as much as $25 to $30 million. In 2013, U. S. Steel filed a petition for administrative reconsideration to the U.S. EPA and a petition for judicial review of the 2013 FIP and denial of the Minnesota SIP to the Eighth Circuit. In April 2016, the EPA promulgated a revised FIP with the same substantive requirements for U. S. Steel. In June 2016, U. S. Steel filed a petition for administrative reconsideration of the 2016 FIP to the U.S. EPA and a petition for judicial review of the 2016 FIP before the Eighth Circuit Court of Appeals. While the proceedings regarding the petition for judicial review of the 2013 FIP remained stayed, oral arguments regarding the petition for judicial review of the 2016 FIP were heard by the Eighth Circuit Court of Appeals on November 15, 2017. Thus, both petitions for judicial review remain with the Eighth Circuit. On December 4, 2017, U.S. EPA published a notification in the Federal Register in which the U.S. EPA denied U. S. Steel’s administrative petitions for reconsideration and stay of the 2013 FIP and 2016 FIP. On February 1, 2018, U. S. Steel filed a petition for judicial review of U.S. EPA’s denial of the administrative petitions for reconsideration to the Eighth Circuit Court of Appeals. U.S. EPA and U. S. Steel ~~continues to defend its three petitions that are before the Eighth Circuit Court of Appeals regarding BART requirements at Minntac and Keetac while pursuing~~reached a ~~resolution that would include an equitable revision to the FIP.~~settlement

regarding the five indurating lines at Minntac. Notice of a 30-day comment period of the settlement agreement was published in the September 11, 2019, Federal Register. The comment period expired on October 11, 2019. U. S. Steel will work with U.S. EPA to address any comments. U. S. Steel and U.S. EPA continue to negotiate resolution for Keetac.

Mon Valley Works

On November 9, 2017, U.S. EPA Region III and ~~ACHD~~the Allegheny County Health Department (ACHD) jointly issued a Notice of Violation (NOV) regarding the Company’s Edgar Thomson facility in Braddock, PA. In addition, on November 20, 2017, ACHD issued a separate, but related NOV to the Company regarding the Edgar Thomson facility. In the NOVs, based upon their inspections and review of documents collected throughout the last two years, the agencies allege that the Company has violated the CAA by exceeding the allowable visible emission standards from certain operations during isolated events. In addition, the agencies allege that the Company has violated certain maintenance, reporting, and recordkeeping requirements. U. S. Steel met with U.S. EPA Region III and ACHD ~~on December 18, 2017 and again on August 15, 2018.~~several times. ACHD, U.S. EPA Region III and U. S. Steel continue to negotiate a potential resolution of the matter.

On June 28, 2018, U. S. Steel received an Enforcement Order from the ACHD for the Clairton Plant for alleged violations of various environmental permit and regulatory requirements pertaining to air emissions. The total penalty demand is $1,091,950 for alleged violations that were to have occurred in late 2017 and early 2018. ACHD ordered U. S. Steel to conduct SO₂ stack tests of C Battery Quench Tower exhaust. ACHD also ordered U. S. Steel to provide an assessment of all emissions points at the Clairton facility to ACHD; and to propose measures, for ACHD approval, to reduce SO₂, particulate matter and visible emissions within sixty days of receipt of the Order. In the Order, ACHD demanded that if U. S. Steel fails to meet any requirements in the Order, U. S. Steel shall place its two worst performing batteries on hot idle until ACHD determines U. S. Steel is in compliance with the Order. U. S. Steel has appealed the Order and posted the penalty amount in an escrow account. A hearing was held December 3 - 6, 2018 and post-hearing briefing concluded on March 29, 2019. The matter remains before the Allegheny County Health Department Hearing Officer. A decision regarding the appeal is not expected until the second quarter 2019.

On November 14, 2018, U. S. Steel received a revised Administrative Order from the ACHD with an assessed penalty of $613,716 for alleged violations regarding fugitive emission sources (coke oven doors, lids, offtakes, charging, high opacity doors and soaking) at the Clairton Plant that were alleged to have occurred during the second quarter of 2018. On December 12, 2018, U. S. Steel appealed the Administrative Order.

On December 24, 2018, U. S. Steel's Clairton Plant experienced a fire, affecting portions of the facility involved in desulfurization of the coke oven gas generated during the coking process. With the desulfurization process out of operation as a result of the fire, U. S. Steel was not able to certify compliance with Clairton Plant’s Title V permit levels for sulfur emissions. U. S. Steel promptly notified ACHD, which has regulatory jurisdiction for the Title V permit, and updated the ACHD regularly on our efforts to mitigate any potential environmental impacts until the desulfurization process was returned to normal operations. Of the approximately 2,400 hours between the date of the fire and April 4, 2019, when the Company resumed desulfurization, there were ten intermittent hours where average SO₂SO2 emissions exceeded the hourly NAAQS for SO₂SO2 at the Allegheny County regional air quality monitors located in Liberty and North Braddock boroughs which are near U. S. Steel's Mon Valley Works facilities. ACHD has asserted that these emission levels were the result of our inability to complete the desulfurization process following the fire and informed U. S. Steel that it will pursue enforcement action against the Company following restoration of the desulfurization process to normal operations. On February 13, 2019, PennEnvironment and Clean Air Council, both environmental, non-governmental organizations, sent U. S. Steel a 60-day notice of intent to sue letter pursuant to the CAA. The letter ~~alleges~~alleged Title V permit violations at the Clairton, Irvin, and Edgar Thomson facilities as a result of the December 24, 2018 Clairton Plant fire. The 60-day notice letter also ~~alleges~~alleged that the violations ~~are causing~~caused adverse public health and welfare impacts to the communities surrounding the Clairton, Irvin, and Edgar Thomson facilities. PennEnvironment and Clean Air Council subsequently filed a Complaint in Federal Court in the Western District of Pennsylvania on April 29, ~~2019.~~2019 to which U. S. Steel has responded. On May 3, 2019, ACHD filed a motion to intervene in the lawsuit which was granted by the Court. On June 25, 2019, ACHD filed its Complaint in Intervention, seeking injunctive relief and civil penalties regarding the alleged Permit violations following the December 24, 2018 fire. The parties are currently engaged in discovery.

Following up to its May 2, 2019, notice of intent to sue U. S. Steel, on August 26, 2019 the Environmental Integrity Project, the Breathe Project and Clean Air Council, environmental, non-governmental organizations, ~~issued~~filed a ~~separate 60-day notice~~complaint in the Western District Court of ~~intent to sue letter contending~~Pennsylvania alleging that the Company ~~violated the CERCLA notification requirements with respect to~~did not report releases of reportable quantities of hydrogen sulfide, benzene, and coke oven emissions from the Clairton, ~~fire.~~

~~In addition,~~Edgar Thomson and Irvin facilities as ~~a result~~would be required under CERCLA because of the fire and our temporary inability to desulfurize coke oven gas, on February 28, 2019, the ACHD issued an Enforcement Order that would have required U. S. Steel to take immediate measures to significantly reduce the production of coke oven gas that would have put the safety of employees, contractors and the public at risk. On March 1, 2019, U. S. Steel filed a notice of appeal of the Order, submitted a petition for stay of the Order, and requested an emergency status conference. On March 1, 2019, after hearing U. S. Steel's testimony, the ACHD Hearing Officer ordered a temporary stay of the Order. After meeting with U. S. Steel, on March 12, 2019, the ACHD issued a revised order that superseded the February 28, 2019 Order. U. S. Steel is complying with the revised order. On April 4, 2019, U. S. Steel completed repairs to the desulphurization equipment which enabled us to resume desulfurizing all of the coke oven gas generated. While no penalty was assessed in the February 28 or March 12 orders, the ACHDfire. The Company will vigorously defend against these claims.

~~has publicly stated that it plans to issue an order with civil penalties and other appropriate measures in the future. No penalty has been assessed to date.~~

On April 1, 2019, U. S. Steel received an Enforcement Order from the ACHD with an assessed penalty of $707,568 for alleged violations regarding fugitive emission sources (coke oven doors, lids, offtakes, charging, high opacity doors and soaking) at the Clairton Plant that were alleged to have occurred during the third and fourth quarters of 2018. On April 25, 2019, U. S. Steel appealed the Enforcement Order. That appeal has been consolidated with the above referenced appeal of the November 14, 2018 Order. A hearing date for the consolidated appeal has been scheduled for September 24, 2019.

On April 24, 2019, U. S. Steel was served with a class action complaint that was filed in the Allegheny Court of Common Pleas related to the December 24, 2018 fire at Clairton. The complaint asserts common law nuisance and negligence claims and seeks compensatory and punitive damages that allegedly were the result of U. S. Steel's conduct that resulted in the fire and U. S. Steel's operations subsequent to the fire. WeThe parties are ~~actively~~currently engaged in discovery. U. S. Steel is vigorously defending ~~this matter; however, it is too early to predict~~ the ~~ultimate outcome or estimate potential damages.~~

matter.

ASBESTOS LITIGATION

As of March 31, ~~2019,~~2020, U. S. Steel was a defendant in approximately ~~745~~808 active cases involving approximately ~~2,315~~2,400 plaintiffs. The vast majority of these cases involve multiple defendants. ~~At December 31, 2018, U. S. Steel was a defendant in approximately 755 active cases involving approximately 2,320 plaintiffs.~~ About 1,540, or approximately 6764 percent, of these plaintiff claims are currently pending in jurisdictions which permit filings with massive numbers of plaintiffs. At December 31, 2019, U. S. Steel was a defendant in approximately 800 active cases involving approximately 2,390 plaintiffs. Based upon U. S. Steel’s experience in such cases, it believes that the actual number of plaintiffs who ultimately assert claims against U. S. Steel will likely be a small fraction of the total number of plaintiffs.

The following table shows activity with respect to asbestos litigation:


Period ended	Opening Number of Claims	Claims Dismissed, Settled and Resolved ^(a)	New Claims	Closing Number of Claims	Opening Number of Claims	Claims Dismissed, Settled and Resolved^(a)	New Claims	Closing Number of Claims
December 31, 2016	3,315	225	250	3,340
December 31, 2017	3,340	275	250	3,315	3,340	275	250	3,315
December 31, 2018	3,315	1,285	290	2,320	3,315	1,285	290	2,320
March 31, 2019	2,320	75	70	2,315
December 31, 2019					2,320	195	265	2,390
March 31, 2020					2,390	90	100	2,400

(a) The period ending December 31, 2018 includes approximately 1,000 dismissed cases previously pending in the State of Texas.

Historically, asbestos-related claims against U. S. Steel fall into three groups: (1) claims made by persons who allegedly were exposed to asbestos on the premises of U. S. Steel facilities; (2) claims made by persons allegedly exposed to products manufactured by U. S. Steel; and (3) claims made under certain federal and maritime laws by employees of former operations of U. S. Steel.

Further, U. S. Steel does not believe that an accrual for unasserted claims is required. At any given reporting date, it is probable that there are unasserted claims that will be filed against the Company in the future. In 2018 and 2019, the Company engaged an outside valuation consultant to assist in assessing its ability to estimate an accrual for unasserted claims. This assessment was based on the Company's settlement experience, including recent claims trends. The analysis focused on settlements made over the last several years as these claims are likely to best represent future claim characteristics. After review by the valuation consultant and U. S. Steel management, it was determined that the Company could not estimate an accrual for unasserted claims.

Despite these uncertainties, management believes that the ultimate resolution of these matters will not have a material adverse effect on U. S. Steel’s financial condition.

Item 1A. Risk Factors

The outbreak of COVID-19 and disruptions in the oil and gas industry have had, and are expected to continue to have, an adverse impact on the Company’s results of operations, financial condition and cash flows.

The global pandemic resulting from the novel coronavirus designated as COVID-19 has had a significant impact on economies, businesses and individuals around the world. Efforts by governments around the world to contain the virus have involved, among other things, border closings and other significant travel restrictions; mandatory stay-at-home and work-from-home orders in numerous countries, including the United States; mandatory business closures; public gathering limitations; and prolonged quarantines. These efforts and other governmental, business and individual responses to the COVID-19 pandemic have led to significant disruptions to commerce, lower consumer demand for goods and services and general uncertainty regarding the near-term and long-term impact of the COVID-19 virus on the domestic and international economy and on public health. These developments and other consequences of the outbreak have and could continue to materially adversely impact the Company's results of operations, financial condition and cash flows.

The U.S. Department of Homeland Security guidance has identified U. S. Steel's business as a critical infrastructure industry, essential to the economic prosperity, security and continuity of the United States. Similarly, in Slovakia, U. S. Steel Kosice was identified by the government as a strategic and critical company, essential to economic prosperity, and continues to operate. However, although we continue to operate, we have experienced and are likely to continue to experience, significant reductions in demand. For example, the oil and gas industry, which is one of our significant end markets, has been experiencing a significant amount of disruption and has been experiencing oversupply at a time of declining demand, resulting in a decline in profitability. Our Tubular operations support the oil and gas industry, and therefore the industry's decline has led to a significant decline in demand for our Tubular products. We also may experience disruptions to our operations resulting from changes in government policy or guidance; quarantines of employees, customers and suppliers in areas affected by the outbreak; and closures of businesses or manufacturing facilities that are critical to our business or our supply chain.

The COVID-19 pandemic could also adversely affect our liquidity and ability to access the capital markets. The Company’s credit ratings were recently downgraded by three credit ratings agencies, all citing, among other things, the uncertainty in duration and impact of the COVID-19 outbreak on our business. Uncertainty regarding the duration of the COVID-19 pandemic and disruptions to the oil and gas industry may, for example, adversely impact our ability to raise additional capital, or require additional capital, or require additional reductions in capital expenditures that are otherwise needed, to support working capital or continuation of our "best of both" strategy. Additionally, government stimulus programs may not be available to the Company, its customers, or its suppliers, or may prove to be ineffective. Furthermore, in the event that the impact from the COVID-19 outbreak causes us to be unable to satisfy any of our financial covenants under the agreements governing our outstanding indebtedness, the availability of credit facilities may become limited, or we may be required to renegotiate such agreements on less favorable terms. For example, based on the most recent four quarters as of March 31, 2020, we have not met the fixed charge negative covenant test under our Credit Facility Agreement, and accordingly, the amount available to the Company under this facility was reduced by $200 million, meaning that as of March 31, 2020, the availability under the Credit Facility Agreement was $300 million. If we are unable to access additional credit at the levels we require, or the cost of credit is greater than expected, it could materially adversely affect our operating results.

COVID-19 could negatively affect our internal controls over financial reporting as a portion of our workforce is required to work from home and therefore new processes, procedures, and controls could be required to respond to changes in our business environment.

The Company may be susceptible to increased litigation related to, among other things, the financial impacts of the pandemic on its business, its ability to meet contractual obligations due to the pandemic, employment practices or policies adopted during the health crisis, or litigation related to individuals contracting COVID-19 as result of alleged exposures on Company premises.

In addition, the COVID-19 outbreak has significantly increased economic and demand uncertainty. The current outbreak and continued spread of COVID-19 could cause a global recession, which would have a further material adverse impact on our results of operations, financial condition and cash flows. The full extent to which the COVID-19 outbreak will affect our operations, and the steel industry generally, remains highly uncertain and will ultimately depend on future developments which cannot be predicted at this time, including, but not limited to, the duration, severity, speed and scope of the outbreak, the length of time required for demand to return and normal economic and operating conditions

to resume. The impact of the COVID-19 outbreak may also have the effect of exacerbating many of the other risks described in Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.



Item 4.	MINE SAFETY DISCLOSURES

The information concerning mine safety violations and other regulatory matters required by Section 150 of the Dodd-Frank Wall Street Reform Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-Q.



Item 5.	~~ISSUER PURCHASES OF EQUITY SECURITIES~~OTHER INFORMATION

~~Purchases of Equity Securities by the Issuer and the Affiliated Purchasers~~None.

~~Share repurchase activity under the Company's stock repurchase program during the three months ended March 31, 2019 was as follows:~~

Period Total Number of Shares Purchased Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced
Plans or Programs

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ^(a)
January 1 - 31, 2019 1,313,982
$ 19.026
1,313,982
$ 200,000,000
February 1 - 28, 2019 219,558
$ 23.443
219,558
$ 194,852,900
March 1 - 31, 2019 582,335
$ 20.441
582,335
$ 182,949,600
Quarter ended March 31, 2019 2,115,875
$ 19.874
2,115,875
$ 182,949,600

^(a)On November 1, 2018, the Company announced that its Board of Directors authorized a stock repurchase program to repurchase up to $300 million of our outstanding common stock over a two-year period at the discretion of management, of which approximately $117 million had been utilized as of March 31, 2019. The Company’s stock repurchase program does not obligate it to acquire any specific number of shares. Under this program, the shares will be purchased from time to time at prevailing market prices, through open market or privately negotiated transactions, depending upon market conditions.



Item 6.	EXHIBITS




10.1		Form of United States Steel Corporation 2016 Omnibus Incentive Compensation Plan Performance ~~Share~~Cash Award Grant Agreement ~~(TSR~~(ROCE Grant).*

10.2		Form of United States Steel Corporation 2016 Omnibus Incentive Compensation Plan Restricted Stock Unit Grant Agreement (Retention Grant).*

10.3		Administrative Procedures for the Executive Management Annual Incentive Compensation Plan under the United States Steel Corporation 2016 Omnibus Incentive Compensation Plan, as approved on February ~~26, 2019.~~25, 2020.*

~~10.3~~		United States Steel Corporation Non Tax-Qualified Retirement Account Program, Amended and Restated Effective January 1, 2019.*

~~10.4~~		United States Steel Corporation Supplemental Thrift Program, Amended and Restated Effective January 1, 2019.*

~~10.5~~		United States Steel Corporation Supplemental Retirement Account Program, Amended and Restated Effective January 1, 2019.*

31.1		Certification of Chief Executive Officer required by Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as promulgated by the Securities and Exchange Commission pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer required by Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as promulgated by the Securities and Exchange Commission pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95		Mine Safety Disclosure required under Section 1503 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

101 ~~INS~~		The following financial information from United States Steel Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 formatted in Inline XBRL ~~Instance Document~~(Extensible Business Reporting Language) includes: (i) the Condensed Consolidated Statement of Operations, (ii) the Condensed Consolidated Statement of Comprehensive Income (Loss), (iii) the Condensed Consolidated Balance Sheet, (iv) the Condensed Consolidated Statement of Cash Flows, and (v) Notes to the Condensed Consolidated Financial Statements.

~~101 SCH~~104		Cover Page Interactive Data File - (formatted as Inline XBRL ~~Taxonomy Extension Schema Document~~

~~101 CAL~~		~~XBRL Taxonomy Extension Calculation Linkbase Document~~

~~101 DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101 LAB~~		~~XBRL Taxonomy Extension Label Linkbase Document~~

~~101 PRE~~		~~XBRL Taxonomy Extension Presentation Linkbase Document~~and contained in Exhibit 101)

* Indicates management contract or compensatory plan or arrangement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned chief accounting officer thereunto duly authorized.



UNITED STATES STEEL CORPORATION

By		/s/ ~~Kimberly D. Fast~~Manpreet S. Grewal

		~~Kimberly D. Fast~~Manpreet S. Grewal
		~~Acting~~Vice President & Controller

May ~~3, 2019~~1, 2020

WEB SITE POSTING

This Form 10-Q will be posted on the U. S. Steel web site, www.ussteel.com, within a few days of its filing.

~~-53-~~-60-



(In millions)	Capital Leases		Operating Leases
2019	$	5	$	66
2020	5		55
2021	5		45
2022	11		37
2023	—		28
Later years	—		72
Total minimum lease payments	$	26	$	303
Less imputed interest costs	4
Present value of net minimum lease payments included in long-term debt	$	22



(In millions)	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	18
Operating cash flows from finance leases	—
Financing cash flows from finance leases	—
Right-of-use assets exchanged for lease liabilities:
Operating leases	8
Finance leases	16



		As of March 31, 2019						As of December 31, 2018
(In millions)	Useful Lives	Gross Carrying Amount		Accumulated Amortization		Net Amount		Gross Carrying Amount		Accumulated Amortization		Net Amount
Customer relationships	22 Years	$	132	$	72	$	60	$	132	$	70	$	62
Patents	10-15 Years	22		7		15		22		7		15
Other	4-20 Years	14		8		6		14		8		6
Total amortizable intangible assets		$	168	$	87	$	81	$	168	$	85	$	83



		Amount reclassified from AOCI
		Three Months Ended March 31,
(In millions)	Details about AOCI components	2019			2018
	Amortization of pension and other benefit items
	Prior service costs ^(a)	$	(7	)	$	(7	)
	Actuarial losses ^(a)	(34		)	(39		)
	Total pensions and other benefits items	(41		)	(46		)
	Derivative reclassifications to Consolidated Statements of Operations	(13		)	(3		)
	Total before tax	(54		)	(49		)
	Tax benefit ^(b)	13			—
	Net of tax	$	(41	)	$	(49	)



Period ended	Opening Number of Claims	Claims Dismissed, Settled and Resolved ^(a)	New Claims	Closing Number of Claims
December 31, 2016	3,315	225	250	3,340
December 31, 2017	3,340	275	250	3,315
December 31, 2018	3,315	1,285	290	2,320
March 31, 2019	2,320	75	70	2,315



Remainder of 2019	2020	2021	2022	2023	Later Years	Total
$554	$605	$389	$322	$312	$730	$2,912


	Steel Products ^(a)												Steel Products^(a)
	Volume		Price		Mix		FX ^(b)		Coke & Other ^(c)		Net Change		Volume	Price	Mix	FX^(b)	Coke & Other^(c)	Net Change
Flat-Rolled	7	%	11	%	(2	)%	—	%	2	%	18	%	(7)%	(12)%	2%	—%	(1)%	(18)%
USSE	(5	)%	—	%	2	%	(7	)%	—	%	(10	)%	(24)%	(6)%	2%	(2)%	(1)%	(31)%
Tubular	15	%	13	%	1	%	—	%	—	%	29	%	(9)%	(14)%	(2)%	—%	(1)%	(26)%



Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ^(a)
January 1 - 31, 2019	1,313,982	$	19.026	1,313,982	$	200,000,000
February 1 - 28, 2019	219,558	$	23.443	219,558	$	194,852,900
March 1 - 31, 2019	582,335	$	20.441	582,335	$	182,949,600
Quarter ended March 31, 2019	2,115,875	$	19.874	2,115,875	$	182,949,600